UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the Month of: August, 2023
Commission File Number: 001-32562
STANTEC INC.
(Translation of registrant’s name into English)
300 – 10220 103 Avenue NW
Edmonton, Alberta
Canada T5J 0K4
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ___
Form 40-F X ___

EXHIBIT INDEX
Exhibit NumberDescription
Stantec Inc. Second Quarter 2023 Management’s Discussion and Analysis
Stantec Inc. Second Quarter 2023 Unaudited Interim Condensed Consolidated Financial Statements
Certification of Interim Filings – President and Chief Executive Officer
Certification of Interim Filings – Executive Vice President and Chief Financial Officer




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
STANTEC INC.
(Registrant)
Date: August 9, 2023
By:/s/ Theresa B. Y. Jang
Name:Theresa B. Y. Jang
Title:Executive Vice President and CFO



Exhibit 99.1 - Stantec Inc.’s Management's Discussion and Analysis
Management’s Discussion and Analysis
August 9, 2023
This discussion and analysis of Stantec Inc.’s (Stantec or the Company) operations, financial position, and cash flows for the quarter and the two quarters ended June 30, 2023, dated August 9, 2023, should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements and related notes for the quarter and the two quarters ended June 30, 2023, and the Management’s Discussion and Analysis (MD&A) and audited consolidated financial statements and related notes included in our 2022 Annual Report filed on February 22, 2023.

Our unaudited interim consolidated financial statements and related notes for the quarter and the two quarters ended June 30, 2023, are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). We continue to apply the same accounting policies as those used in 2022. Amendments to accounting standards adopted in the quarter and disclosed in note 3 of our unaudited interim consolidated financial statements for the quarter ended June 30, 2023 (incorporated here by reference), did not have a material impact on the Company's consolidated financial statements or accounting policies. All amounts shown in this report are in Canadian dollars unless otherwise indicated.

Additional information regarding our Company, including our Annual Information Form, is available on SEDAR+ at sedarplus.ca and on EDGAR at sec.gov. Such additional information is not incorporated here by reference, unless otherwise specified, and should not be deemed to be part of this MD&A. Stantec trades on the TSX and the NYSE under the symbol STN. Visit us at stantec.com or find us on social media.

Non-IFRS and Other Financial Measures
The Company reports its financial results in accordance with IFRS. However, certain indicators used by the Company to analyze and evaluate its results are non-IFRS or other financial measures and ratios, including: adjusted EBITDA, adjusted net income, adjusted earnings per share (EPS), adjusted return on invested capital (ROIC), net debt to adjusted EBITDA, days sales outstanding (DSO), free cash flow, margin (percentage of net revenue), organic growth (retraction), acquisition growth, measures described as on a constant currency basis and the impact of foreign exchange or currency fluctuations, compound annual growth rate (CAGR), net debt, total capital managed, working capital, and current ratio, as well as measures and ratios calculated using these non-IFRS or other financial measures. These measures are categorized as non-IFRS financial measures and ratios, supplementary financial measures, or capital management measures and described in the Definitions of Non-IFRS and Other Financial Measures (Definitions) and Liquidity and Capital Resources sections of this MD&A and, where applicable, reconciliations from the non-IFRS measure to the most directly comparable measure calculated in accordance with IFRS are provided (see the Q2 2023 Financial Highlights, Financial Performance, Liquidity and Capital Resources, and Definitions sections).

These non-IFRS and other financial measures do not have a standardized meaning under IFRS and, therefore, may not be comparable to similar measures presented by other issuers. Management believes that, in addition to conventional measures prepared in accordance with IFRS, these non-IFRS and other financial measures and ratios provide useful information to investors to assist them in understanding components of and trends in our financial results. These measures should not be considered in isolation or viewed as a substitute for the related financial information prepared in accordance with IFRS.
Management’s Discussion and Analysis
June 30, 2023
M-1
Stantec Inc.
Business Model
As a global design and delivery leader in sustainable engineering, architecture, and environmental services, Stantec is a trusted advisor for our clients and communities. Stantec’s multidisciplinary teams address climate change, urbanization, and infrastructure resiliency, and we are well positioned to address the pipeline of opportunities arising from various stimulus programs, market momentum, and growing demands for sustainable and climate change solutions. As part of our business model, we explore and develop innovative ideas and digital solutions that complement our core consulting services.

Stantec's vision is to remain a top tier global design firm that maximizes long-term, sustainable value for our stakeholders, through continued diversification through organic and acquisition growth.

The Stantec community unites more than 28,000 employees working in over 400 locations across six continents. Our geographic and service diversification allow us to cultivate close client relationships and provide professional services in various sectors across all phases of the project life cycle. Please see pages M-1 to M-2 of Stantec’s 2022 Annual Report for further details on our business model.

Strategic Acquisitions Completed in 2022 and 2023
Following is a list of acquisitions that contributed to revenue growth in our reportable segments and business operating units:
BUSINESS OPERATING UNITS
REPORTABLE SEGMENTSDate
Acquired		Primary Location# of EmployeesInfrastructureWaterBuildingsEnvironmental ServicesEnergy & Resources
United States
L2POctober 2022
Philadelphia, Pennsylvania
40●
Environmental Systems Design
June 2023
Chicago, Illinois
300●
Global
Barton WillmoreApril 2022Reading, United Kingdom300●


Management’s Discussion and Analysis
June 30, 2023
M-2
Stantec Inc.

Q2 2023 Financial Highlights
For the quarter ended
June 30,		For the two quarters ended
June 30,
2023202220232022
(In millions of Canadian dollars, except per share 
amounts and percentages)		$% of Net
Revenue		$% of Net
Revenue		$% of Net
Revenue		$% of Net
Revenue
Gross revenue1,638.2 128.1 %1,376.6 123.3 %3,177.4 126.7 %2,690.5 124.2 %
Net revenue1,278.7 100.0 %1,116.7 100.0 %2,507.2 100.0 %2,166.8 100.0 %
Direct payroll costs584.7 45.7 %514.0 46.0 %1,153.2 46.0 %997.0 46.0 %
Project margin694.0 54.3 %602.7 54.0 %1,354.0 54.0 %1,169.8 54.0 %
Administrative and marketing expenses487.3 38.1 %431.6 38.6 %975.6 38.9 %857.7 39.6 %
Depreciation of property and equipment14.7 1.1 %14.4 1.3 %30.2 1.2 %28.6 1.3 %
Depreciation of lease assets30.2 2.4 %29.9 2.7 %61.1 2.4 %60.5 2.8 %
Net impairment (reversal) of lease assets0.4 0.1 %(2.6)(0.2 %)(2.1)(0.1 %)(2.6)(0.1 %)
Amortization of intangible assets26.4 2.1 %26.2 2.3 %52.7 2.1 %50.5 2.3 %
Net interest expense22.3 1.7 %15.4 1.4 %43.0 1.7 %27.8 1.3 %
Other(0.8)(0.1 %)8.4 0.8 %(3.8)(0.1 %)9.1 0.4 %
Income taxes25.5 2.0 %18.7 1.7 %44.4 1.8 %32.7 1.5 %
Net income88.0 6.9 %60.7 5.4 %152.9 6.1 %105.5 4.9 %
Basic and diluted earnings per share (EPS)0.79 n/m0.55 n/m1.38 n/m0.95 n/m
Adjusted EBITDA (note)
216.0 16.9 %186.7 16.7 %395.1 15.8 %338.9 15.6 %
Adjusted net income (note)
109.4 8.6 %92.6 8.3 %190.3 7.6 %161.0 7.4 %
Adjusted diluted EPS (note)
0.99 n/m0.83 n/m1.72 n/m1.45 n/m
Dividends declared per common share0.195 n/m0.180 n/m0.390 n/m0.360 n/m
note: Adjusted EBITDA, adjusted net income, and adjusted diluted EPS are non-IFRS measures (discussed in the Definitions section of this MD&A).
n/m = not meaningful

Q2 2023 compared to Q2 2022
We delivered strong second quarter earnings, driven by robust organic net revenue growth, which was achieved in every regional and business operating unit, and strong project execution and operational performance.
•Net revenue increased 14.5% or $162.0 million to $1.3 billion, primarily driven by 11.2% organic growth. Double-digit organic growth was achieved in all our regions and in our Water, Environmental Services, and Energy & Resources businesses.
•Project margin increased $91.3 million or 15.1% to $694.0 million. As a percentage of net revenue, project margin increased by 30 basis points to 54.3%.
•Adjusted EBITDA increased $29.3 million or 15.7% to $216.0 million. Adjusted EBITDA margin increased by 20 basis points over Q2 2022 to 16.9%, despite a significant expense related to the revaluation of our long-term incentive plan (LTIP), primarily due to strong share price appreciation in the quarter. Excluding the revaluation, adjusted EBITDA margin was 17.5%.
•Net income increased 45.0%, or $27.3 million, to $88.0 million, and diluted EPS increased 43.6%, or $0.24, to $0.79, mainly due to strong net revenue growth, solid project margins, and lower administrative and marketing expenses as a percentage of net revenue.
Management’s Discussion and Analysis
June 30, 2023
M-3
Stantec Inc.

•Adjusted net income and adjusted diluted EPS achieved record highs in the quarter. Adjusted net income grew 18.1%, or $16.8 million, to $109.4 million, achieving 8.6% of net revenue (9.0% without the effect of the LTIP revaluation), and adjusted diluted EPS increased 19.3% to $0.99 ($1.04 without the effect of the LTIP revaluation).
•Contract backlog increased to $6.6 billion at June 30, 2023, a record high reflecting 10.0% organic growth from December 31, 2022—with double-digit organic backlog growth in our US and Canada operations as well as in Environmental Services and Water. Contract backlog represents approximately 13 months of work—an increase of one month from December 31, 2022.
•Operating cash flows increased $35.4 million, with cash inflows of $31.0 million, reflecting strong revenue growth and operational performance. This compares to $4.4 million outflows in the comparative period, which resulted primarily from the Cardno financial system integration.
•DSO was 81 days, consistent with December 31, 2022 and March 31, 2023.
•On June 30, 2023, we acquired Environmental Systems Design, Inc. (ESD), a 300-person firm headquartered in Chicago that provides building engineering services, specializing in mission critical and data center services.
•Net debt to adjusted EBITDA (on a trailing twelve-month basis) at June 30, 2023 was 1.8x, remaining within our internal target range of 1.0x to 2.0x, and reflecting the impact of funding the ESD acquisition on the last day of the reporting period.
•On June 27, 2023, we issued $250 million senior unsecured notes due June 27, 2030 that bear interest at a fixed rate of 5.393% per annum. These notes were assigned an investment-grade credit rating of BBB by DBRS Limited. Additionally, we entered into and fully drew upon an unsecured bilateral term credit facility of $100 million that matures on June 17, 2024. The proceeds of both the notes and new term facility were used to repay a portion of existing indebtedness on the revolving credit facility.
•On August 9, 2023, our Board of Directors declared a dividend of $0.195 per share, payable on October 16, 2023, to shareholders of record on September 29, 2023.

Year-to-date Q2 2023 compared to year-to-date Q2 2022
•Net revenue increased 15.7% or $340.4 million to $2.5 billion, primarily driven by 11.7% organic growth. Double-digit organic growth was achieved in all regions and in our Water, Environmental Services, and Energy & Resources businesses.
•Project margin increased $184.2 million or 15.7% to $1.4 billion. As a percentage of net revenue, project margin remained consistent at 54.0%.
•Adjusted EBITDA increased $56.2 million or 16.6% to $395.1 million. Adjusted EBITDA margin increased by 20 basis points over the prior period to 15.8%, despite a significant expense related to the revaluation of our LTIP, primarily due to strong share price appreciation in the year to date. Excluding the revaluation, adjusted EBITDA margin was 16.4%.
•Net income increased 44.9%, or $47.4 million, to $152.9 million, and diluted EPS increased 45.3%, or $0.43, to $1.38, mainly due to strong net revenue growth and lower administrative and marketing expenses as a percentage of net revenue.
•Adjusted net income grew 18.2%, or $29.3 million, to $190.3 million, achieving 7.6% of net revenue (8.1% without the effect of the LTIP revaluation), and adjusted diluted EPS increased 18.6% to $1.72 ($1.82 without the effect of the LTIP revaluation).

Management’s Discussion and Analysis
June 30, 2023
M-4
Stantec Inc.

•Operating cash flows increased $66.1 million, with cash inflows of $67.7 million, reflecting strong revenue growth and operational performance. This compares to $1.6 million in the comparative period, which resulted primarily from the Cardno financial system integration.
•Year to date Q2 2023, we repurchased 129,036 of our common shares under our Normal Course Issuer Bid (NCIB) program at a cost of $10.0 million.

Reconciliation of Non-IFRS Financial Measures
For the quarter ended
June 30,		For the two quarters ended
June 30,
(In millions of Canadian dollars, except per share amounts)2023202220232022
Net income 88.0 60.7 152.9 105.5 
Add back (deduct):
Income taxes25.5 18.7 44.4 32.7 
Net interest expense22.3 15.4 43.0 27.8 
Net impairment (reversal) of lease assets (note 1)0.9 (1.9)(2.0)(1.9)
Depreciation and amortization71.3 70.5 144.0 139.6 
Unrealized (gain) loss on equity securities(3.3)12.5 (7.2)18.5 
Acquisition, integration, and restructuring costs (note 4)11.3 10.8 20.0 16.7 
Adjusted EBITDA 216.0 186.7 395.1 338.9 

For the quarter ended
June 30,		For the two quarters ended
June 30,
(In millions of Canadian dollars, except per share amounts)2023202220232022
Net income 88.0 60.7 152.9 105.5 
Add back (deduct) after tax:
Reversal of lease asset impairment (note 1)0.6 (1.5)(1.6)(1.5)
Amortization of intangible assets related to acquisitions (note 2)14.6 15.7 29.1 30.2 
Unrealized (gain) loss on equity securities (note 3)(2.6)9.5 (5.6)14.1 
Acquisition, integration, and restructuring costs (note 4)8.8 8.2 15.5 12.7 
Adjusted net income109.4 92.6 190.3 161.0 
Weighted average number of shares outstanding - diluted111,015,228 111,054,142 110,953,350 111,287,552 
Adjusted earnings per share - diluted0.99 0.83 1.72 1.45 
See the Definitions section of this MD&A for our discussion of non-IFRS and other financial measures used and additional reconciliations of non-IFRS financial measures.
note 1: The net impairment (reversal) of lease assets includes onerous contracts associated with the impairment for the quarter ended June 30, 2023 of $0.5 (2022 - $0.7) and for the two quarters ended June 30, 2023 of $0.1 (2022 - $0.7). For the quarter ended June 30, 2023, this amount is net of tax of $0.3 (2022 - $(0.4)). For the two quarters ended June 30, 2023, this amount is net of tax of $(0.4) (2022 - $(0.4)).
note 2: The add back of intangible amortization relates only to the amortization from intangible assets acquired through acquisitions and excludes the amortization of software purchased by Stantec. For the quarter ended June 30, 2023, this amount is net of tax of $4.2 (2022 - $4.9). For the two quarters ended June 30, 2023 this amount is net of tax of $8.4 (2022 - $9.4).
note 3: For the quarter ended June 30, 2023, this amount is net of tax of $(0.7) (2022 - $3.0). For the two quarters ended June 30, 2023 this amount is net of tax of $(1.6) (2022- $4.4).
note 4: The add back of other costs primarily relates to integration expenses associated with our acquisitions and restructuring costs. For the quarter ended June 30, 2023, this amount is net of tax of $2.5 (2022 - $2.6). For the two quarters ended June 30, 2023, this amount is net of tax of $4.5 (2022- $4.0).
Management’s Discussion and Analysis
June 30, 2023
M-5
Stantec Inc.

Financial Targets - Revised
We are revising and increasing certain targets contained within our 2023 guidance (provided on page M-10 in our 2022 Annual Report, incorporated here by reference) based on the strength of our financial performance to date and the outlook for the balance of this year, further described below in the Outlook section.

We are raising our guidance for net revenue and adjusted diluted EPS growth and narrowing the target range for adjusted EBITDA as a percentage of net revenue.
Previously Published 2023 Annual RangeRevised 2023 Annual Range
Targets
Net revenue growth
7% to 11%10% to 13%
Adjusted EBITDA as % of net revenue (note)
16% to 17%16.3% to 16.7%
Adjusted net income as % of net revenue (note)
above 7.5%above 7.5%
Adjusted diluted EPS growth (note)
9% to 13%12% to 15%
Adjusted ROIC (note)
above 10.5%above 10.5%
In setting our revised targets and guidance, the average value for the US dollar was assumed to be $1.34, GBP to be $1.65, and AU $0.91. For all other underlying assumptions, see page M-24. These targets do not include the impact of revaluing our share-based compensation, which fluctuates primarily due to share price movements subsequent to December 31, 2022.
note: Adjusted EBITDA, adjusted net income, adjusted diluted EPS, and adjusted ROIC are non-IFRS measures discussed in the Definitions section of this MD&A.


Outlook
The guidance we provided in the Outlook section of our 2022 Annual Report (incorporated here by reference) was based on our expectation that market fundamentals would continue to spur strong growth in our US and Global business, while Canada would maintain high levels of activity, moderating to organic growth in the low single digits. The Canadian market has proven to be more resilient than expected across our business units, and particularly in Environmental Services driven by higher volumes for permitting, archeological work, and environmental impact assessments. In the US, growth is being propelled by the continued imperative to solve water scarcity challenges, protect against severe weather events, and transition to a net zero future. These factors have led to increased expectations for overall organic net revenue growth and earnings in 2023 than previously projected.

Net Revenue
We are raising our net revenue growth target range to 10% to 13% (previously 7% to 11%), and overall organic net revenue growth target to high single digits (previously mid to high single digits). In Canada, we now expect organic net revenue growth to be in the mid single digits (previously low single digits). Additionally, we now expect organic growth in the US to be in the low double digits (previously high single digits to low double digits), driven by momentum from our record-high US backlog and project opportunities arising from previously announced programs and acts. We also continue to expect Global to achieve mid to high single digit organic growth, driven by continued high levels of activity in our UK Water business and demand and stimulus in Environmental Services.

Adjusted EBITDA Margin
We are narrowing our target range for adjusted EBITDA margin to 16.3% to 16.7% (previously 16.0% to 17.0%). This reflects our confidence in continued solid project execution and operational efficiency.
Income Taxes
We have made updates and adjustments to our earlier projections, certain tax estimates, and mix of earnings from foreign jurisdictions we operate in. Based on these factors, we have revised our expected 2023 effective tax rate (without discrete transactions) to be in the range of 22% to 23% (previously 23% to 24%).

Management’s Discussion and Analysis
June 30, 2023
M-6
Stantec Inc.

Adjusted Diluted EPS
Based on the factors described above, we are raising our target range for adjusted diluted earnings per share growth to 12% to 15% (previously 9% to 13%).

Consistent with guidance previously provided, these targets do not include the impact of revaluing our share-based compensation, which fluctuates primarily due to share price movements subsequent to December 31, 2022. For the year to date, this revaluation resulted in a $14.9 million expense (pre-tax), the equivalent of 60 basis points relative to net revenue and $0.10 per share.

The above targets also do not include any assumptions for additional acquisitions given the unpredictable nature of the size and timing of such acquisitions.
Financial Performance
The following sections outline specific factors that affected the results of our operations in Q2 2023 and year to date Q2 2023.

Gross and Net Revenue
While providing professional services, we incur certain direct costs for subconsultants, equipment, and other expenditures that are recoverable directly from our clients. Revenue associated with these direct costs is included in gross revenue. Because these direct costs and associated revenue can vary significantly from contract to contract, changes in gross revenue may not be indicative of our revenue trends. Accordingly, we also report net revenue (which is gross revenue less subconsultant and other direct expenses) and analyze results in relation to net revenue rather than gross revenue.

We generate approximately 75% of our gross revenue in foreign currencies, primarily in US dollars, British pounds (GBP), and Australian (AU) dollars. Fluctuations in these and other currencies had a net $33.7 million positive impact on our net revenue results in Q2 2023 compared to Q2 2022 and a net $69.8 million positive impact year to date in 2023 compared to 2022:
•The US dollar averaged $1.28 in Q2 2022 and $1.34 in Q2 2023—a 4.7% increase. Year to date, the US dollar averaged $1.27 in Q2 2022 and $1.35 in Q2 2023—a 6.3% increase. The strengthening US dollar compared to the Canadian dollar had a positive effect on gross and net revenues.
•The GBP averaged $1.60 in Q2 2022 and $1.68 in Q2 2023—a 5.0% increase. Year to date, the GBP averaged $1.65 in Q2 2022 and $1.66 in Q2 2023—a 0.6% increase. The strengthening GBP compared to the Canadian dollar had a positive effect on gross and net revenues.
•The AU dollar averaged $0.91 in Q2 2022 and $0.90 in Q2 2023—a 1.1% decrease. Year to date, the AU dollar averaged $0.91 in Q2 2022 and Q2 2023—remaining consistent with limited impact on gross and net revenues.
Fluctuations in other foreign currencies did not have a material impact on our gross and net revenue.

Revenue earned by acquired companies in the first 12 months following an acquisition is reported as revenue from acquisitions and thereafter as organic revenue.

Management’s Discussion and Analysis
June 30, 2023
M-7
Stantec Inc.

Gross Revenue by Reportable Segment - Q2 2023
(In millions of Canadian dollars, except percentages)Q2 2023Q2 2022Total ChangeChange Due to AcquisitionsChange Due to Foreign ExchangeChange Due to Organic Growth% of Organic growth
Canada364.2330.234.0—n/a34.010.3 %
United States913.5736.8176.74.638.1134.018.2 %
Global360.5309.650.9—6.344.614.4 %
Total1,638.21,376.6261.64.644.4212.6
Percentage Growth19.0 %0.3 %3.3 %15.4 %


Net Revenue by Reportable Segment - Q2 2023
(In millions of Canadian dollars, except percentages)Q2 2023Q2 2022Total ChangeChange Due to AcquisitionsChange Due to Foreign ExchangeChange Due to Organic Growth% of Organic Growth
Canada320.3291.628.7—n/a28.79.8 %
United States667.2565.9101.33.129.269.012.2 %
Global291.2259.232.0—4.527.510.6 %
Total1,278.71,116.7162.03.133.7125.2
Percentage Growth14.5 %0.3 %3.0 %11.2 %

Gross Revenue by Reportable Segment - year-to-date Q2 2023
(In millions of Canadian dollars, except percentages)Q2 2023 YTDQ2 2022 YTDTotal ChangeChange Due to AcquisitionsChange Due to Foreign ExchangeChange Due to Organic Growth% of Organic growth
Canada708.3639.568.8—n/a68.810.8 %
United States1,758.01,439.0319.09.086.2223.815.6 %
Global711.1612.099.112.36.480.413.1 %
Total3,177.42,690.5486.921.392.6373.0
Percentage Growth18.1 %0.8 %3.4 %13.9 %

Net Revenue by Reportable Segment - year-to-date Q2 2023
(In millions of Canadian dollars, except percentages)Q2 2023 YTDQ2 2022 YTDTotal ChangeChange Due to AcquisitionsChange Due to Foreign ExchangeChange Due to Organic Growth% of Organic Growth
Canada623.3565.657.7—n/a57.710.2 %
United States1,310.41,096.9213.55.665.5142.413.0 %
Global573.5504.369.211.94.353.010.5 %
Total2,507.22,166.8340.417.569.8253.1
Percentage Growth15.7 %0.8 %3.2 %11.7 %

Management’s Discussion and Analysis
June 30, 2023
M-8
Stantec Inc.

Gross Revenue by Business Operating Unit - Q2 2023
(In millions of Canadian dollars, except percentages)Q2 2023Q2 2022Total ChangeChange Due to AcquisitionsChange Due to Foreign ExchangeChange Due to Organic Growth% of Organic Growth
Infrastructure448.8387.061.8—11.350.513.0 %
Water341.7283.258.5—15.942.615.0 %
Buildings295.6245.650.04.65.739.716.2 %
Environmental Services357.3301.056.3—7.848.516.1 %
Energy & Resources194.8159.835.0—3.731.319.6 %
Total1,638.21,376.6261.64.644.4212.6
Percentage growth19.0 %0.3 %3.3 %15.4 %


Net Revenue by Business Operating Unit - Q2 2023
(In millions of Canadian dollars, except percentages)Q2 2023Q2 2022Total ChangeChange Due to AcquisitionsChange Due to Foreign ExchangeChange Due to Organic Growth% of Organic Growth
Infrastructure356.6318.837.8—8.829.09.1 %
Water268.2220.847.4—11.635.816.2 %
Buildings224.7202.422.33.14.015.27.5 %
Environmental Services263.0229.133.9—6.227.712.1 %
Energy & Resources166.2145.620.6—3.117.512.0 %
Total1,278.71,116.7162.03.133.7125.2
Percentage growth14.5 %0.3 %3.0 %11.2 %

Gross Revenue by Business Operating Unit - year-to-date Q2 2023
(In millions of Canadian dollars, except percentages)Q2 2023 YTDQ2 2022 YTDTotal ChangeChange Due to AcquisitionsChange Due to Foreign ExchangeChange Due to Organic Growth% of Organic Growth
Infrastructure861.3756.6104.712.323.768.79.1 %
Water669.4549.4120.0—24.395.717.4 %
Buildings586.7488.098.79.015.074.715.3 %
Environmental Services678.9585.393.6—21.572.112.3 %
Energy & Resources381.1311.269.9—8.161.819.9 %
Total3,177.42,690.5486.921.392.6373.0
Percentage growth18.1 %0.8 %3.4 %13.9 %

Management’s Discussion and Analysis
June 30, 2023
M-9
Stantec Inc.

Net Revenue by Business Operating Unit - year-to-date Q2 2023
(In millions of Canadian dollars, except percentages)Q2 2023 YTDQ2 2022 YTDTotal ChangeChange Due to AcquisitionsChange Due to Foreign ExchangeChange Due to Organic Growth% of Organic Growth
Infrastructure689.2614.974.311.917.844.67.3 %
Water528.0424.8103.2—17.785.520.1 %
Buildings457.1402.354.85.611.238.09.4 %
Environmental Services502.3440.661.7—16.245.510.3 %
Energy & Resources330.6284.246.4—6.939.513.9 %
Total2,507.22,166.8340.417.569.8253.1
Percentage growth15.7 %0.8 %3.2 %11.7 %

We continued to achieve double-digit growth from strong performances in all of our geographies and businesses, which contributed to a 14.5% net revenue increase in Q2 2023 compared to Q2 2022 and a 15.7% increase year to date. Public infrastructure spending and private investment continue to be key growth drivers in 2023, with increased project work in water security, transportation, and energy transition. Other key drivers are the urgent challenges to tackle climate change and sustainability, along with re-shoring of domestic production to strengthen local supply chain resilience and security. Investments in smart cities, buildings, and designing facilities to meet the needs in the civic, healthcare, residential, and industrial markets also continue to be growth drivers.

Canada
We achieved 9.8% organic net revenue growth in the quarter and 10.2% year to date in our Canadian operations as both private and public spending remained robust and contributed to double-digit growth in Environmental Services, Infrastructure, and Water. Environmental Services capitalized on continued demand for our expertise in permitting and archeological work to support midstream energy and transportation projects and increased environmental impact assessments activity in the renewable energy sector. Solid growth in Infrastructure was primarily driven by bridge work in western Canada, as well as successful recoveries and change order approvals on certain projects. Our wastewater solutions contributed to strong organic growth in Water. Energy & Resources also delivered strong growth spurred from power transmission and distribution projects as well as a renewable energy project in western Canada to deliver energy transition solutions.

United States
Net revenue increased 17.9% in the quarter and 19.5% year to date, reflecting strong organic growth, the positive impact of foreign exchange, and acquisition growth. Double-digit organic net revenue growth continued in Q2 2023, particularly in Water, Buildings, and Energy & Resources. Our Water team capitalized on public sector and industrial project demands across the US and continued our work on large-scale water security projects in the western US. Momentum from investments in healthcare, industrial, commercial, and science and technology sectors spurred growth in Buildings. Energy & Resources delivered strong organic growth, driven by an acceleration of activities on a major power grid upgrade project in Puerto Rico. Infrastructure also delivered solid organic growth primarily on the strength of industrial activities in Community Development.
Global
In our Global operations, we achieved net revenue growth of 12.3% in the quarter and 13.7% year to date, reflecting strong organic and acquisition net revenue growth. Momentum from 2022 continued into 2023 and contributed to double-digit organic net revenue growth, particularly in Water and Energy & Resources. Our industry-leading Water business continued to deliver strong organic growth across the UK, New Zealand, and Australia through long-term framework agreements and public sector investment in water infrastructure. Energy & Resources delivered robust organic growth as a major energy storage project ramped up in the UK, along with the increasing imperative for energy-transition solutions that continued to drive demand in mining for copper and other metals.

Management’s Discussion and Analysis
June 30, 2023
M-10
Stantec Inc.

Backlog
We define “backlog” as the total value of all contracts that have been awarded less the total value of work completed on these contracts as of the reporting date. Our backlog equates to our remaining performance obligations that are unsatisfied (or partially satisfied) at the end of the reporting period, as reported under IFRS.

(In millions of Canadian dollars, except percentages)Jun 30, 2023Dec 31, 2022Total ChangeChange Due to AcquisitionsChange Due to Foreign ExchangeChange Due to Organic Growth% of Organic Growth
Canada1,395.31,249.2 146.1 —n/a146.111.7 %
United States4,252.63,715.9 536.7 188.1(79.8)428.411.5 %
Global927.7936.6 (8.9)—(25.1)16.21.7 %
Total6,575.65,901.7 673.9 188.1(104.9)590.7
Percentage Growth11.4 %3.2 %(1.8)%10.0 %

Our contract backlog at June 30, 2023 of $6.6 billion achieved a new record and grew 10.0% organically, or $590.7 million, representing approximately 13 months of work, an increase of one month from December 31, 2022. The increases in our contract backlog was driven by double-digit organic growth in both Canada and the US and in our Water, Buildings, and Environmental Services business lines.

Major Project Awards
Our diversified approach and multidisciplinary teams position us to address the pipeline of opportunities arising from various stimulus programs and the growing demands for sustainable solutions and climate change mitigation and resiliency. Our backlog and project wins continue to expand to meet our clients' focus on aging infrastructure, water security, and energy transition.

Canada
Our industry-leading Water team was selected to provide engineering services for the design and construction management of the Queensway East-Cawthra Trunk Sewer upgrade in Ontario. Investment in aging infrastructure across Canada continues with numerous highway, bridge, and underpass improvement projects, including consulting engineering services for the Macdonald Bridge in Halifax, Nova Scotia. This steel repair and protective coating program will provide 25 years of service life to this 68-year-old bridge. Our Infrastructure team was selected for a major design build project for Deerfoot Trail in Calgary, Alberta. Constructed in the 1970s, Deerfoot Trail is the busiest freeway in Alberta and requires improvements to support traffic increases.

United States
In the US, water and water security continue to be key themes, and our expertise and innovations in water facilitated project wins for key wastewater, water use and water reclamation projects throughout the country. Buildings project wins included a large-scale university renovations project as well as new education and learning center projects. Through the collaborative efforts of our Energy & Resources and Water teams, we were awarded an Owner’s Engineer Services agreement extension supporting the development of offshore wind in Massachusetts, highlighting the success of our integrated service offerings. This renewable energy project is expected to produce 2.8 gigawatts of offshore clean electricity, enough to power approximately 1.7 million homes.
Global
Our Buildings team secured several hospital expansion and advisory services projects, as well as design and supervision contracts for two schools. The education wins demonstrates our global expertise and reflects our top-three ranking in ENR’s Top International Design firms in General Buildings - Education. Also, through our participation in a joint venture, we were appointed to deliver the front-end engineering and design supporting what is expected to be the world's largest pumped hydro storage project for Queensland Hydro in Australia.
Management’s Discussion and Analysis
June 30, 2023
M-11
Stantec Inc.


Project Margin
In general, project margin fluctuations depend on the particular mix of projects in progress during any quarter and on project execution. The fluctuations reflect our business model, which is based on providing services across diverse geographic locations, business operating units, and all phases of the infrastructure and facilities project life cycle. For a definition of project margin, refer to the Financial Performance section of our 2022 Annual Report (incorporated here by reference).

Project Margin by Reportable Segment
 Quarter Ended Jun 30,Two Quarters Ended Jun 30,
 2023202220232022
(In millions of Canadian dollars, except percentages)$% of Net
Revenue		$% of Net
Revenue		$% of Net
Revenue		$% of Net
Revenue
Canada172.7 53.9 %154.6 53.0%334.8 53.7 %299.7 53.0%
United States363.7 54.5 %310.9 54.9%714.9 54.6 %601.4 54.8%
Global157.6 54.1 %137.2 52.9%304.3 53.1 %268.7 53.3%
Total694.0 54.3 %602.7 54.0%1,354.0 54.0 %1,169.8 54.0%

Project Margin by Business Operating Unit
 Quarter Ended Jun 30,Two Quarters Ended Jun 30,
 2023202220232022
(In millions of Canadian dollars, except percentages)$% of Net
Revenue		$% of Net
Revenue		$% of Net
Revenue		$% of Net
Revenue
Infrastructure191.9 53.8 %171.0 53.6%368.2 53.4 %330.8 53.8%
Water146.9 54.8 %121.5 55.0%285.4 54.1 %231.8 54.6%
Buildings118.4 52.7 %107.2 53.0%244.7 53.5 %215.9 53.7%
Environmental Services147.7 56.2 %130.5 57.0%280.9 55.9 %249.2 56.6%
Energy & Resources89.1 53.6 %72.5 49.8%174.8 52.9 %142.1 50.0%
Total694.0 54.3 %602.7 54.0%1,354.0 54.0 %1,169.8 54.0%

In the quarter, project margin increased $91.3 million, or 15.1%, and as a percentage of net revenue, project margin increased to 54.3% from 54.0%. Year to date, project margin increased $184.2 million, or 15.7% and as a percentage of net revenue, project margin remained consistent with the prior year at 54.0%. Net revenue growth driven by robust public and private investment contributed to the project margin increases. As a percentage of net revenue, project margin remained in line with our expectations as a result of our continued discipline in project execution, our ability to increase rates on certain projects to mitigate the impacts of wage inflation, and increased selectivity in project pursuits.

In Canada, project margin in the quarter increased $18.1 million to $172.7 million and year to date increased $35.1 million to $334.8 million. As a percentage of net revenue, project margin was 53.9% in the quarter and 53.7% year to date, a 90 and 70 basis point increase, respectively, compared to prior periods due primarily to strong volume on high margin archeological work in Environmental Services and solid project performance, particularly in Energy & Resources. Additionally, certain project recoveries and change order approvals in Infrastructure contributed to project margin increases.

In our US operations, project margin in the quarter increased $52.8 million to $363.7 million and year to date increased $113.5 million to $714.9 million. As a percentage of net revenue, project margin decreased slightly—40 basis points in the quarter to 54.5% and 20 basis points year to date to 54.6%. Slight margin decreases were
Management’s Discussion and Analysis
June 30, 2023
M-12
Stantec Inc.

primarily from project mix in Infrastructure and Environmental Services, offset with solid project execution, particularly in Water and Energy & Resources.

In our Global operations, project margin increased $20.4 million to $157.6 million and year to date increased $35.6 million to $304.3 million. As a percentage of net revenue, project margin increased 120 basis points to 54.1% in the quarter with a slight decrease of 20 basis points to 53.1% year to date. Project margins strengthened over the second quarter from solid project execution in Water and higher margin work in Energy & Resources.

Administrative and Marketing Expenses
Administrative and marketing expenses increased $55.7 million and decreased as a percentage of net revenue from 38.6% in Q2 2022 to 38.1% in Q2 2023. Year to date, administrative and marketing expenses increased $117.9 million and decreased as a percentage of net revenue from 39.6% in 2022 to 38.9% in 2023. Our disciplined management of operations resulted in higher utilization, which contributed to a decrease in administrative and marketing costs as a percentage of net revenue. Lower provisions for claims estimates also contributed to the decrease. Partly offsetting these decreases were higher share-based compensation costs of $7.6 million in the quarter and $20.0 million year to date, which include the impact of the revaluation of our LTIP ($7.3 million, or 60 basis points as a percentage of net revenue in Q2, and $14.9 million, or 60 basis points year to date). We also incurred higher acquisition, integration, and restructuring costs of $3.3 million in the first two quarters of 2023 related primarily to our integration and training costs associated with financial system migrations for Barton Willmore and L2P, and certain restructuring costs related to our real estate strategy.

Net Interest Expense
Net interest expense increased $6.9 million in the quarter and $15.2 million in the first two quarters of 2023 compared to the same periods in 2022. This was primarily due to rising interest rates impacting our credit and term loan facilities.

Other Income
Other income was $10.0 million in the first two quarters of 2023 compared to a loss of $4.0 million in the same period in 2022. Other income from our investments held for self-insured liabilities included a net gain of $7.3 million year to date compared to a net loss of $4.0 million in the same period in 2022.

Income Taxes
Our effective income tax rate decreased from 23.6% in Q2 2022 to 22.5% in Q2 2023 and year to date from 23.7% in 2022 to 22.5% in 2023. We continue to benefit from our implemented tax strategy and recognized additional tax savings.
Management’s Discussion and Analysis
June 30, 2023
M-13
Stantec Inc.

Summary of Quarterly Results
The following table presents selected data derived from our consolidated financial statements for each of the eight most recently completed quarters. This information should be read in conjunction with the applicable interim unaudited and annual audited consolidated financial statements and related notes.

Quarterly Unaudited Financial Information
2023
20222021
(In millions of Canadian dollars, except per share amounts)
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Gross revenue1,638.2 1,539.2 1,513.5 1,473.2 1,376.6 1,313.9 1,185.3 1,168.3 
Net revenue1,278.7 1,228.5 1,130.4 1,160.0 1,116.7 1,050.1 916.2 932.9 
Net income88.0 64.9 73.5 68.0 60.7 44.8 16.6 70.0 
Diluted earnings per share0.79 0.59 0.66 0.61 0.55 0.40 0.15 0.63 
Adjusted net income (note)
109.4 80.9 91.1 95.0 92.6 68.4 63.8 80.4 
Adjusted diluted EPS (note)
0.99 0.73 0.82 0.86 0.83 0.61 0.57 0.72 
note: Adjusted net income and adjusted diluted EPS are non-IFRS measures further discussed in the Definitions section of this MD&A.
Quarterly EPS and adjusted diluted EPS are not additive and may not equal the annual EPS reported. This is a result of the effect of shares issued on the weighted average number of shares. Quarterly and annual diluted EPS and adjusted diluted EPS are also affected by the change in the market price of our shares since we do not include dilutive options when the exercise price of the option is not in the money.

The table below compares quarters, summarizing the impact of acquisitions, organic growth, and foreign exchange on net revenue:

Q2 2023Q1 2023Q4 2022Q3 2022
vs.vs.vs.vs.
(In millions of Canadian dollars)Q2 2022Q1 2022Q4 2021Q3 2021
Increase (decrease) in net revenue due to
Organic growth125.2 127.9 96.9 102.3 
Acquisition growth3.114.4 89.9 120.7 
Impact of foreign exchange rates on revenue earned by foreign subsidiaries33.7 36.1 27.4 4.1 
Total increase in net revenue162.0 178.4 214.2 227.1 

We experience variability in our results of operations from quarter to quarter due to the nature of the sectors and geographic locations we operate in. In the first and fourth quarters, we see slowdowns related to winter weather conditions in the northern hemisphere and holiday schedules. The increase in net revenue from Q2 2023 compared to Q2 2022 primarily reflects organic growth and a net positive foreign exchange impact. (See additional information on the operating results in our MD&A for each respective quarter.)
Management’s Discussion and Analysis
June 30, 2023
M-14
Stantec Inc.

Statements of Financial Position
The following table highlights the major changes to assets, liabilities, and equity since December 31, 2022:
(In millions of Canadian dollars)Jun 30, 2023Dec 31, 2022
Total current assets2,231.1 1,937.8 
Property and equipment252.6 250.7 
Lease assets454.4 470.4 
Goodwill2,378.3 2,346.4 
Intangible assets300.6 320.4 
Net employee defined benefit asset67.4 57.4 
Deferred tax assets43.8 45.2 
Other assets257.6 224.6 
Total assets5,985.8 5,652.9 
Current portion of long-term debt150.2 52.2 
Current portion of provisions47.5 48.1 
Current portion of lease liabilities105.1 99.0 
All other current liabilities1,218.8 1,210.7 
Total current liabilities1,521.6 1,410.0 
Lease liabilities492.5 522.4 
Income taxes payable3.9 7.1 
Long-term debt1,409.7 1,183.6 
Provisions143.9 149.7 
Net employee defined benefit liability28.5 32.3 
Deferred tax liabilities11.2 28.2 
Other liabilities33.5 33.6 
Equity2,341.0 2,286.0 
Total liabilities and equity5,985.8 5,652.9 

Refer to the Liquidity and Capital Resources section of this MD&A for an explanation of the changes in current assets, current liabilities, and shareholders’ equity.

The carrying amounts of assets and liabilities for our US operations and other global subsidiaries on our consolidated statements of financial position decreased primarily due to the weakening of the US and Australian dollars relative to the Canadian dollar, partially offset by the strengthening of the British pound relative to the Canadian dollar. Other factors that impacted our long-term assets and liabilities are indicated below.

The impact of the ESD acquisition and measurement period adjustments for prior acquisitions increased goodwill by $74.5 million, intangible assets by $36.0 million, and lease assets and liabilities by $14.8 million and $11.9 million, respectively. These values are based on a preliminary purchase price allocation and are pending a final determination of the fair value of the assets and liabilities acquired. The final allocation may differ from the preliminary allocation.

Lease assets and intangible assets were reduced by depreciation and amortization expense partly offset by lease additions and modifications. Total current and long-term portions of other assets increased primarily as a result of purchases of investments, unrealized fair value gains recorded in investments held for self-insured liabilities, and an increase in the fair value of derivative financial instruments.

Long-term debt increased $324.1 million due to the issuance of $250.0 million in senior unsecured notes, a new unsecured bilateral term credit facility of $100.0 million, and an increase in notes payable related to the ESD
Management’s Discussion and Analysis
June 30, 2023
M-15
Stantec Inc.

acquisition. These increases were partly offset by payments made on our revolving credit facility, software financing obligations, and notes payable. Lease liabilities decreased due to lease payments made partly offset by additions, modifications, and interest accretion.

Net employee defined benefit asset increased $10.0 million and net employee defined benefit liability decreased $3.8 million for a combined net increase in the net asset position of $13.8 million, largely due to contributions made to the defined benefit pension plans.

Deferred tax liabilities decreased due to the estimated change in temporary differences, including those related to research and experimental expenditures in the US that, beginning in 2022, are amortized for tax purposes.
Liquidity and Capital Resources
We are able to meet our liquidity needs through various sources, including cash generated from operations; long- and short-term borrowings from our $1.2 billion revolving and term loan credit facilities (with access to an additional $600 million subject to approval), $550 million senior unsecured notes, and £20 million uncommitted unsecured multicurrency credit facility; and the issuance of common shares. We use funds primarily to pay operational expenses; complete acquisitions; sustain capital spending on property, equipment, and software; repay long-term debt; repurchase shares; and pay dividend distributions to shareholders.

We believe that internally generated cash flows, supplemented by borrowings, if necessary, will be sufficient to cover our normal operating and capital expenditures. However, under certain favorable market conditions, we do consider issuing common shares to facilitate acquisition growth or to reduce borrowings under our credit facilities.

Working Capital
The following table summarizes working capital information at June 30, 2023, compared to December 31, 2022:

(In millions of Canadian dollars, except ratios)Jun 30, 2023Dec 31, 2022
Current assets2,231.1 1,937.8 
Current liabilities1,521.6 1,410.0 
Working capital (note)
709.5 527.8 
Current ratio (note)
1.47 1.37 
note: See the Definitions section of this MD&A for our discussion of supplementary financial measures used.

The carrying amounts of assets and liabilities for our US operations and other global subsidiaries on our consolidated statements of financial position decreased primarily due to the weakening of the US and Australian dollars relative to the Canadian dollar, partially offset by the strengthening of the British pound relative to the Canadian dollar. Other factors that impacted our current assets and liabilities are indicated below.

Current assets increased due to a collective increase of $167.0 million in trade and other receivables, unbilled receivables, and contract assets due to strong organic revenue growth and the ESD acquisition. In addition, cash and deposits increased $79.5 million (explained in the Cash Flows section of this MD&A), prepaid expenses increased $13.3 million related to subscription renewal fees paid for certain cloud-based software solutions, and income taxes recoverable increased due to the timing of tax installments.
Our DSO, defined in the Definitions section of this MD&A, was 81 days at June 30, 2023, consistent with December 31, 2022.
The increase in current liabilities was largely the result of increases in trade and other payables, due to increased activities and the timing of supplier payments, and the current portion of long-term debt (explained in the Statement of Financial Position section of this MD&A). These increases were partly offset by decreases in bank indebtedness
Management’s Discussion and Analysis
June 30, 2023
M-16
Stantec Inc.

(explained in the Cash Flows section of this MD&A) and the current portion of other liabilities primarily related to cash-settled share-based compensation.

Cash Flows Outstanding
Our cash flows from and used in operating, investing, and financing activities are reflected in the consolidated statements of cash flows and are summarized below:
Quarter Ended Jun 30,Two Quarters Ended Jun 30,
(In millions of Canadian dollars)20232022Change20232022Change
Cash flows from (used in) operating activities31.0 (4.4)35.4 67.7 1.6 66.1 
Cash flows used in investing activities(104.4)(40.0)(64.4)(128.4)(11.6)(116.8)
Cash flows from (used in) financing activities173.5 14.3 159.2 145.3 (10.0)155.3 

Cash Flows From Operating Activities
Cash flows from operating activities were $67.7 million, which increased $66.1 million compared to 2022. Strong revenue growth and operational performance contributed to increased cash flow. This was partly offset by increased tax installments paid, reflecting higher projected taxable income and the new US tax legislation which delays the deduction of certain research and experimental expenditures, higher employee incentive payments related to prior year's performance, and increased interest payments. Operating cash flows in 2022 reflected impacts from the Cardno financial system integration.

Cash Flows Used in Investing Activities
Cash flows used in investing activities were $128.4 million year to date compared to $11.6 million in 2022. This is due primarily to our investments held for self-insured liabilities which included net purchases of $19.2 million in the first two quarters of 2023 compared to net proceeds of $60.6 million earned from the sale of investments in the prior period. Net cash used to fund a portion of our acquisition of ESD was $75.6 million compared to $47.6 million used in business acquisitions in the prior period. Cash used to purchase property and equipment and intangible assets of $40.4 million was also higher compared to $26.2 million in 2022.

Cash Flows From Financing Activities
Cash flows from financing activities for the year to date were $145.3 million, a $155.3 million increase in cash inflows compared to 2022. The increase was driven by net proceeds from the issue of senior unsecured notes and a new bilateral term loan facility, which aggregated to $348.8 million, and lower share repurchases. These increases were partly offset by net repayments made on our revolving credit facility and bank indebtedness.

Capital Management
Our objective in managing Stantec's capital is to provide sufficient capacity to cover normal operating and capital expenditures and to have flexibility for financing future growth. We focus our capital allocations on increasing shareholder value through funding accretive acquisitions in pursuit of our growth strategy while maintaining a strong balance sheet, repurchasing shares opportunistically, and managing dividend increases to our target payout ratio in a sustainable manner.

We manage our capital structure according to our internal guideline of maintaining a net debt to adjusted EBITDA ratio (actual trailing twelve months) of less than 2.0 to 1.0. There may be occasions when we exceed our target by completing acquisitions that increase our debt level for a period of time.

Management’s Discussion and Analysis
June 30, 2023
M-17
Stantec Inc.

(In millions of Canadian dollars, except ratios)Jun 30, 2023Dec 31, 2022
Current and non-current portion of long-term debt1,559.9 1,235.8 
Less: cash and cash equivalents(227.8)(148.3)
Bank indebtedness35.4 65.4 
Net debt1,367.5 1,152.9 
Shareholders' equity2,341.0 2,286.0 
Total capital managed3,708.5 3,438.9 
Trailing twelve months adjusted EBITDA from continuing operations (note)780.1 723.9 
Net debt to adjusted EBITDA ratio (note)
1.8 1.6 
note: See the Definitions section of this MD&A for our discussion of non-IFRS measures used.

At June 30, 2023, our net debt to adjusted EBITDA ratio was 1.8x, falling within our stated internal guideline, and higher compared to December 31, 2022. Net debt increased as a result of financing strong organic growth activities and funding the ESD acquisition, which closed on June 30, 2023. We expect cash flows from operations and the growth in our adjusted EBITDA will reduce our leverage ratio by the end of the year.

Our credit facilities include senior unsecured notes, revolving credit and term loan facilities, and an uncommitted multicurrency credit facility. Senior unsecured notes, including notes issued on June 27, 2023, aggregate to $550 million. Our syndicated senior credit facilities, structured as a sustainability-linked loan, consist of a revolving credit facility in the maximum of $800 million, a term loan of $310 million, and access to additional funds of $600 million through an accordion feature. Our unsecured bilateral term credit facility is $100 million and our uncommitted unsecured multicurrency credit facility is £20 million.

We are required to comply with certain covenants as part of our revolving credit facility, term loan facilities, and senior unsecured notes. The key financial covenants include, but are not limited to, ratios that measure our debt relative to our profitability (as defined by the credit facilities agreement).

At June 30, 2023, $295.7 million was available in our credit facilities for future activities, and we were in compliance with the covenants related to our credit facilities as at and throughout the period ended June 30, 2023.

Shareholders’ Equity
Shareholders’ equity increased $55.0 million from December 31, 2022. Net income of $152.9 million earned in the first two quarters of 2023 and share options exercised for cash of $9.3 million were partly offset by comprehensive loss of $54.3 million, primarily related to exchange differences on translation of our foreign subsidiaries, dividends declared of $43.3 million, and shares repurchased under our NCIB of $10.0 million.

Our normal course issuer bid (NCIB) on the TSX was renewed on November 14, 2022, enabling us to repurchase up to 5,538,309 of our common shares during the period of November 16, 2022 to November 15, 2023. We also have an Automatic Share Purchase Plan with a broker that allows the purchase of common shares for cancellation under the NCIB at any time during predetermined trading blackout periods within certain pre-established parameters.

We believe that, from time to time, the market price of our common shares does not fully reflect the value of our business or future business prospects and that, at such times, the repurchase of outstanding common shares are an appropriate use of available Company funds. We repurchased 129,036 common shares for an aggregate price of $10.0 million in the first two quarters of 2023 compared to repurchases of 1,085,676 common shares for an aggregate price of $65.3 million in the same period of 2022.
Management’s Discussion and Analysis
June 30, 2023
M-18
Stantec Inc.

Other
Outstanding Share Data
At June 30, 2023, 110,958,545 common shares were outstanding. From July 1, 2023 to August 9, 2023, no shares were repurchased under our Automatic Share Purchase Plan and at August 9, 2023, 110,958,545 common shares were outstanding.

Contractual Obligations
The nature and extent of our contractual obligations did not change materially from those described in the Contractual Obligations section of our 2022 Annual Report (incorporated here by reference). Management believes sufficient liquidity is available to meet our contractual obligations as at June 30, 2023.

Off-Balance Sheet Arrangements
The nature and extent of our off-balance sheet arrangements did not change materially from those described in the Off-Balance Sheet Arrangements section of our 2022 Annual Report (incorporated here by reference).

Financial Instruments and Market Risk
At June 30, 2023, the nature and extent of our use of financial instruments did not change materially from those described in the Financial Instruments and Market Risk section of our 2022 Annual Report (incorporated here by reference).

We continue to hold total return swap (TRS) agreements with a financial institution to manage a portion of our exposure to changes in the fair value of our shares for certain cash-settled share-based payment obligations. The TRS agreements fix the impact that our share price has on the payments required to settle the obligations for restricted share units and deferred share units.

Related-Party Transactions
Transactions with subsidiaries, structured entities, associated companies, joint ventures, and key management personnel are further described in note 33 of our audited consolidated financial statements for the year ended December 31, 2022 (included in our 2022 Annual Report and incorporated here by reference). At June 30, 2023, the nature and extent of these transactions were not materially different from those disclosed in the 2022 Annual Report.
Critical Accounting Estimates, Developments, and Measures
Critical Accounting Estimates
The preparation of consolidated financial statements in accordance with IFRS requires us to make various estimates and assumptions. However, future events may result in significant differences between estimates and actual results.

There has been no significant change in our critical accounting estimates in Q2 2023 from those described in our 2022 Annual Report in the Critical Accounting Estimates, Developments, and Measures section and in note 5 of our December 31, 2022, audited consolidated financial statements (incorporated here by reference).

Recent Accounting Pronouncements
Certain amendments disclosed in note 3 of our unaudited interim consolidated financial statements for the quarter ended June 30, 2023 (incorporated here by reference) had an effective date of January 1, 2023, but did not have a material impact on the consolidated financial statements or accounting policies for the two quarters ended June 30, 2023.


Management’s Discussion and Analysis
June 30, 2023
M-19
Stantec Inc.

Future Adoptions
Standards, amendments, and interpretations that we reasonably expect to be applicable at a future date and intend to adopt when they become effective are described in note 6 of our 2022 audited consolidated financial statements and note 3 of our unaudited interim consolidated financial statements for the quarter ended June 30, 2023 (both incorporated here by reference). We are currently considering the impact of adopting these standards, amendments, and interpretations on our consolidated financial statements.

Definitions of Non-IFRS and Other Financial Measures
This MD&A includes references to and uses measures and terms that are not specifically defined in IFRS and do not have any standardized meaning prescribed by IFRS. These measures and terms are defined below. These non-IFRS and other financial measures may not be comparable to similar measures presented by other companies. We believe that the measures defined here are useful for providing investors with additional information to assist them in understanding components of our financial results.

Non-IFRS Financial Measures and Ratios

Adjusted Measures
We use several adjusted financial measures because we believe they are useful for providing securities analysts, investors, and other interested parties with additional information to assist them in understanding components of our financial results (including a more complete understanding of factors and trends affecting our operating performance). These adjusted measures also provide supplemental measures of operating performance and improve comparability of operating results from one period to another, thus highlighting trends that may not otherwise be apparent when relying solely on IFRS financial measures. Unless otherwise noted, a reconciliation of these adjusted measures to the most directly comparable IFRS measure is included on page M-5.

Adjusted EBITDA represents net income from continuing operations before interest expense, income taxes, depreciation of property and equipment, depreciation of lease assets, amortization of intangible assets, impairment charges and reversals thereof, acquisition, integration and restructuring costs, and other adjustments for other specific items that are significant but are not reflective of our underlying operations. Specific items are subjective; however, we use our judgement and informed decision-making when identifying items to be excluded in calculating our adjusted measures. We use adjusted EBITDA as a measure of pre-tax operating cash flow. The most comparable IFRS measure for adjusted EBITDA is net income.

Adjusted Net Income represents net income from continuing operations excluding the amortization of intangibles acquired through acquisitions, impairment charges and reversals thereof, acquisition, integration and restructuring costs, and adjustments for other specific items that are significant but are not reflective of our underlying operations, all on an after-tax basis. Specific items are subjective; however, we use our judgement and informed decision-making when identifying items to be excluded in calculating our adjusted measures. We use adjusted net income as a measure of overall profitability. The most comparable IFRS measure for adjusted net income is net income.

Adjusted Earnings Per Share (EPS) is a non-IFRS ratio calculated by dividing adjusted net income (defined above) by the basic and diluted weighted average number of shares outstanding, respectively.

Adjusted Return on Invested Capital (ROIC) is a non-IFRS ratio that represents our full year adjusted net income (defined above) before tax-adjusted interest relative to our average aggregate net debt and adjusted shareholders’ equity, determined annually. Average net debt and adjusted shareholders’ equity are calculated using balances from past years. Adjusted shareholders’ equity includes the impact of adjusted net income from continuing operations (as defined above). We use adjusted ROIC to evaluate annual returns generated on our debt and equity capital. The most comparable IFRS measure for adjusted net income before tax-adjusted interest is net income. The most comparable measure for adjusted shareholders’ equity is shareholders’ equity.
Management’s Discussion and Analysis
June 30, 2023
M-20
Stantec Inc.


Net Debt to Adjusted EBITDA. As part of our assessment of our capital structure, we monitor net debt to adjusted EBITDA, a non-IFRS ratio. It is defined as the sum of (1) long-term debt, including current portion, and bank indebtedness, less cash and cash equivalents, divided by (2) adjusted EBITDA (as defined above). Net debt to adjusted EBITDA is quantified in the Liquidity and Capital Resources section on page M-18.

Free Cash Flow is used to monitor the availability of discretionary cash as part of our capital management. It is defined as operating cash flows less capital expenditures and net lease payments. A reconciliation of free cash flow to its most comparable IFRS measure, cash flows from operating activities as reported under IFRS, is included in the Additional Reconciliations of Non-IFRS Financial Measure on page M-22.

Margin. We calculate margin as a percentage of net revenue and monitor margin in comparison to our internal targets. Margin is a non-IFRS ratio when applied to non-IFRS financial measures.

Constant Currency Basis and Impact of Foreign Exchange. We monitor the impact of changing foreign exchange rates, quantify foreign exchange impacts, and, from time to time, prepare analyses on a constant currency basis (i.e., excluding the impact of foreign exchange) to better understand changes in activity. Amounts presented on a constant currency basis are non-IFRS financial measures; related fractions and percentages are non-IFRS ratios.

Compound Annual Growth Rate (CAGR) is a metric we use to evaluate the growth in our business. It represents the growth rate over a period of time on an annual compounded basis. CAGR is a non-IFRS ratio when applied to non-IFRS measures.

Supplementary Financial Measures

Days Sales Outstanding (DSO). DSO is a metric we use to evaluate the efficiency of our working capital. It represents the average number of days to convert our trade receivables, unbilled receivables, contract assets, and deferred revenue to cash. We calculate DSO by annualizing gross revenue for the quarter as reported under IFRS.

Organic Growth (Retraction) and Acquisition Growth. To evaluate our performance, we quantify the change in revenue and backlog as either related to organic growth (retraction), acquisition growth, or the impact of foreign exchange. Revenue and backlog earned by acquired companies in the first 12 months following an acquisition is reported as growth from acquisitions and thereafter as organic growth (retraction). Organic growth (retraction) excludes the impact of foreign currency fluctuations. From time to time, we also quantify the impacts of certain unusual events to organic growth (retraction) to provide useful information to investors to help better understand our financial results.

Margin (defined above) is a supplementary financial measure when applied to IFRS measures.

Compound Annual Growth Rate (CAGR) (defined above) is a supplementary financial measure when applied to IFRS financial measures.

Current ratio is a supplementary financial measure calculated by dividing current assets by current liabilities that we use in assessing overall liquidity.

Working capital is a supplementary financial measure that we use as a measure for assessing overall liquidity. It is calculated by subtracting current liabilities from current assets.

Capital Management Measures

Net debt and total capital managed are categorized as capital management measures and quantified on page M-18.

Management’s Discussion and Analysis
June 30, 2023
M-21
Stantec Inc.

Additional Reconciliation of Non-IFRS Financial Measure

Free Cash Flow

Quarter Ended Jun 30,Two Quarters Ended Jun 30,
(In millions of Canadian dollars)2023202220232022
Net cash flows from operating activities31.0 (4.4)67.7 1.6 
Less: capital expenditures (property and equipment and intangible assets)(18.6)(13.3)(40.4)(26.2)
Less: net lease payments(31.6)(35.0)(61.4)(71.8)
Free cash flow (note)
(19.2)(52.7)(34.1)(96.4)
note: See the Definitions section of this MD&A for a discussion of free cash flow, a non-IFRS measure.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our CEO and CFO evaluated our disclosure controls and procedures (defined in the US Securities Exchange Act Rules 13a–15(e) and 15d–15(e)) as of the end of the period covered by this quarterly report. Based on the evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective at such date.

Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a–15 or 15d–15 under the Securities Exchange Act of 1934 that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Risk Factors
For the two quarters ended June 30, 2023, there has been no significant change in our risk factors from those described in our 2022 Annual Report (incorporated here by reference).

Subsequent Event
Dividends
On August 9, 2023, our Board of Directors declared a dividend of $0.195 per share, payable on October 16, 2023, to shareholders of record on September 29, 2023.
Caution Regarding Forward-Looking Statements
Our public communications often include written or verbal forward-looking statements within the meaning of the US Private Securities Litigation Reform Act and Canadian securities laws. Forward-looking statements are disclosures regarding possible events, conditions, or results of operations that are based on assumptions about future economic conditions or courses of action and include financial outlooks or future-oriented financial information. Any financial outlook or future-oriented financial information in this Management’s Discussion and Analysis has been approved by management of Stantec. Such financial outlook or future-oriented financial information is provided for the purpose of providing information about management’s current expectations and plans relating to the future.

Forward-looking statements may involve but are not limited to comments with respect to our objectives for 2023 and beyond, our strategies or future actions, our targets, our expectations for our financial condition or share price, or the
Management’s Discussion and Analysis
June 30, 2023
M-22
Stantec Inc.

results of or outlook for our operations. Statements of this type may be contained in filings with securities regulators or in other communications and are contained in this report. Forward-looking statements in this report include but are not limited to the following:
•Our vision to remain a top tier global design firm;
•Our belief that Stantec remains strongly positioned to address the pipeline of opportunities arising from stimulus spending programs, market momentum, and growing demands for sustainable and climate change solutions;
•Our expectations in the Outlook section:
◦Increased expectations for overall organic net revenue growth and earnings in 2023 than previously projected.
◦Net revenue growth will increase 10% to 13%, with net revenue organic growth in high single digits;
◦Organic net revenue growth in Canada is expected to be in the mid single digits;
◦Organic net revenue growth in the US is expected to be in the low double digits, driven by momentum from our record-high US backlog and project opportunities arising from previously announced programs and acts;
◦Organic net revenue growth in Global is expected to achieve mid- to high-single digit, driven by continued high levels of activity in our UK Water business and demand and stimulus in Environmental Services;
◦Adjusted EBITDA margin is expected to be in the range of 16.3% to 16.7% and reflects our confidence in continued solid project execution and operational efficiency;
◦Our effective tax rate (without discrete transactions) is expected to be in the range of 22% to 23%;
◦Adjusted diluted earnings per share growth is expected to be in the range of 12% to 15%;
•Our belief that public infrastructure spending, private investment, urgent challenges to tackle climate change and sustainability, re-shoring of domestic production, and investments in smart cities, buildings and designing facilities to meet civic, healthcare, residential and industrial markets are key growth drivers;
•Our ability to increase rates on certain projects to mitigate the impacts of wage inflation and increased selectivity in project pursuits;
•Our expectations regarding our sources of cash and our ability to meet our normal operating and capital expenditures in the Liquidity and Capital Resources section, based in part on the design of our business model; and
•Our expectations in the Critical Accounting Estimates, Developments and Measures section.

These describe the management expectations and targets by which we measure our success and assist our shareholders in understanding our financial position as at and for the periods ended on the dates presented in this report. Readers are cautioned that this information may not be appropriate for other purposes.

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that predictions, forecasts, conclusions, projections, and other forward-looking statements will not prove to be accurate. We caution readers of this report not to place undue reliance on our forward-looking statements since a number of factors could cause actual future results, conditions, actions, or events to differ materially from the targets, expectations, estimates, or intentions expressed in these forward-looking statements.

Management’s Discussion and Analysis
June 30, 2023
M-23
Stantec Inc.

Future outcomes relating to forward-looking statements may be influenced by many factors and material risks. For the two quarters ended June 30, 2023, there has been no significant change in our risk factors from those described in our 2022 Annual Report (incorporated here by reference).

Assumptions
In determining our forward-looking statements, we consider material factors, including assumptions about the
performance of Canadian, US, and various international economies and their effect on our business. We have
revised certain annual targets previously included in our 2022 Annual Report. The assumptions we made at the time of publishing our annual targets and outlook for 2023 are listed in the Cautionary Note Regarding Forward-Looking Statements section of our 2022 Annual Report (incorporated here by reference). The following information updates and therefore supersedes those assumptions.
•In our 2022 Annual Report, our outlook forecast assumed an average value for the US dollar of $1.32, for the British pound of $1.62, and for the Australian dollar of $0.95. In setting our revised targets, we have updated the average value of the US dollar to $1.34, the British pound to $1.65, and the Australian dollar to $0.91.
•Our effective income tax rate, without discrete transactions, was revised from a range of 23% to 24%, assumed in our 2022 Annual Report, to a range of 22.0% to 23.0%.
•The Canadian unemployment rate—5.0% at the end of 2022—increased to 5.4% as of June 2023 and is expected to improve in 2023. In the United States, the unemployment rate—3.5% at the end of 2022—increased to 3.6% as of June 2023.
•In Canada, the number of total housing starts in 2023 was forecasted to decrease by greater than 10% compared to 2022. As of June 2023, new housing construction in Canada decreased 8% over the first two quarters of 2022. In the United States, the forecasted seasonally adjusted annual rate of total housing starts for 2023 was expected to be 1.14 million. This has since been revised to 1.37 million at June 2023.
•The American Institute of Architects ABI (architectural billing index) has increased to 50.1 as of June 2023 from 47.5 at December 2022.
The preceding list of factors is not exhaustive. Investors and the public should carefully consider these factors, other uncertainties and potential events, and the inherent uncertainty of forward-looking statements when relying on these statements to make decisions with respect to our Company. The forward-looking statements contained herein represent our expectations as of August 9, 2023, and, accordingly, are subject to change after such date. Except as may be required by law, we do not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time. In the case of the ranges of expected performance for fiscal year 2023, it is our current practice to evaluate and, where we deem appropriate, to provide updates. However, subject to legal requirements, we may change this practice at any time at our sole discretion.
Management’s Discussion and Analysis
June 30, 2023
M-24
Stantec Inc.

Exhibit 99.2 - Stantec Inc.'s Unaudited Interim Condensed Consolidated Financial Statements
Interim Condensed Consolidated Statements of Financial Position
(Unaudited)
June 30, 2023December 31, 2022
(In millions of Canadian dollars)Notes$$
ASSETS
Current
Cash and cash equivalents227.8 148.3 
Trade and other receivables5993.3 1,028.0 
Unbilled receivables743.7 553.4 
Contract assets95.3 83.9 
Income taxes recoverable96.7 65.4 
Prepaid expenses61.9 48.6 
Other assets612.4 10.2 
Total current assets2,231.1 1,937.8 
Non-current
Property and equipment252.6 250.7 
Lease assets4454.4 470.4 
Goodwill42,378.3 2,346.4 
Intangible assets4300.6 320.4 
Net employee defined benefit asset67.4 57.4 
Deferred tax assets43.8 45.2 
Other assets6257.6 224.6 
Total assets5,985.8 5,652.9 
LIABILITIES AND EQUITY
Current
Bank indebtedness7,1235.4 65.4 
Trade and other payables793.4 755.7 
Lease liabilities105.1 99.0 
Deferred revenue336.9 327.7 
Income taxes payable25.0 25.9 
Long-term debt7,12150.2 52.2 
Provisions847.5 48.1 
Other liabilities928.1 36.0 
Total current liabilities1,521.6 1,410.0 
Non-current
Lease liabilities4492.5 522.4 
Income taxes payable3.9 7.1 
Long-term debt7,121,409.7 1,183.6 
Provisions8143.9 149.7 
Net employee defined benefit liability28.5 32.3 
Deferred tax liabilities11.2 28.2 
Other liabilities933.5 33.6 
Total liabilities3,644.8 3,366.9 
Shareholders’ equity
Share capital10993.5 983.8 
Contributed surplus5.5 6.7 
Retained earnings1,255.7 1,154.9 
Accumulated other comprehensive income86.3 140.6 
Total shareholders’ equity2,341.0 2,286.0 
Total liabilities and equity5,985.8 5,652.9 
See accompanying notes
F-1
Stantec Inc.

Interim Condensed Consolidated Statements of Income
(Unaudited)
For the quarter ended
June 30,		For the two quarters ended
June 30,
2023202220232022
(In millions of Canadian dollars, except per share amounts)Notes$$$$
Gross revenue1,638.2 1,376.6 3,177.4 2,690.5 
Less subconsultant and other direct expenses359.5 259.9 670.2 523.7 
Net revenue1,278.7 1,116.7 2,507.2 2,166.8 
Direct payroll costs13584.7 514.0 1,153.2 997.0 
Project margin694.0 602.7 1,354.0 1,169.8 
Administrative and marketing expenses10,12,13487.3 431.6 975.6 857.7 
Depreciation of property and equipment14.7 14.4 30.2 28.6 
Depreciation of lease assets30.2 29.9 61.1 60.5 
Amortization of intangible assets26.4 26.2 52.7 50.5 
Net impairment (reversal) of lease assets0.4 (2.6)(2.1)(2.6)
Net interest expense
7,15
22.3 15.4 43.0 27.8 
Other net finance expense0.6 1.1 1.5 2.3 
Foreign exchange loss1.8 1.0 4.7 2.8 
Other (income) loss14(3.2)6.3 (10.0)4.0 
Income before income taxes 113.5 79.4 197.3 138.2 
Income taxes
Current34.4 26.9 59.6 46.6 
Deferred(8.9)(8.2)(15.2)(13.9)
Total income taxes25.5 18.7 44.4 32.7 
Net income for the period88.0 60.7 152.9 105.5 
Weighted average number of shares outstanding - basic
111,015,228 110,897,590 110,953,350 111,119,211 
Weighted average number of shares outstanding - diluted
111,015,228 111,054,142 110,953,350 111,287,552 
Shares outstanding, end of the period110,958,545 110,730,097 110,958,545 110,730,097 
Earnings per share, basic and diluted0.79 0.55 1.38 0.95 
See accompanying notes
F-2
Stantec Inc.

Interim Condensed Consolidated Statements
of Comprehensive Income
(Unaudited)
For the quarter ended
June 30,		For the two quarters ended
June 30,
2023202220232022
(In millions of Canadian dollars)Notes$$$$
Net income for the period88.0 60.7 152.9 105.5 
Other comprehensive income (loss)
Items that may be reclassified to net income in subsequent periods:
Exchange differences on translation of foreign operations
12(49.4)11.5 (55.3)(5.5)
Net unrealized (loss) gain on financial instruments6,12(1.0)(0.6)1.0 (3.1)
Other comprehensive (loss) income for the period, net of tax(50.4)10.9 (54.3)(8.6)
Total comprehensive income for the period,
net of tax		37.6 71.6 98.6 96.9 
See accompanying notes
F-3
Stantec Inc.

Interim Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited)
Shares
Outstanding
(note 10)
Share
Capital
(note 10)
Contributed
Surplus
(note 10)
Retained
Earnings		Accumulated Other
Comprehensive
Income (Loss)		Total
(In millions of Canadian dollars, except shares)#$$$$$
Balance, December 31, 2021111,333,479 972.4 10.6 1,043.4 (24.7)2,001.7 
Net income105.5 105.5 
Other comprehensive loss(8.6)(8.6)
Total comprehensive income
(loss)
105.5 (8.6)96.9 
Share options exercised for
cash
482,294 15.4 15.4 
Share-based compensation(1.2)(1.2)
Shares repurchased under
    Normal Course Issuer Bid		(1,085,676)(9.6)(0.1)(55.6)(65.3)
Fair value reclass of share
options exercised
2.6 (2.6)— 
Dividends declared(39.9)(39.9)
Balance, June 30, 2022110,730,097 980.8 6.7 1,053.4 (33.3)2,007.6 
Balance, December 31, 2022110,809,020 983.8 6.7 1,154.9 140.6 2,286.0 
Net income152.9 152.9 
Other comprehensive loss(54.3)(54.3)
Total comprehensive income
(loss)
152.9 (54.3)98.6 
Share options exercised for
cash
278,561 9.3 9.3 
Share-based compensation0.4 0.4 
Shares repurchased under
Normal Course Issuer Bid
(129,036)(1.2)— (8.8)(10.0)
Fair value reclass of share
options exercised
1.6 (1.6)— 
Dividends declared(43.3)(43.3)
Balance, June 30, 2023110,958,545 993.5 5.5 1,255.7 86.3 2,341.0 
See accompanying notes
F-4
Stantec Inc.

Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the quarter ended
June 30,		For the two quarters ended
June 30,
2023202220232022
(In millions of Canadian dollars)Notes$$$$
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net income88.0 60.7 152.9 105.5 
Add (deduct) items not affecting cash:
Depreciation of property and equipment14.7 14.4 30.2 28.6 
Depreciation of lease assets30.2 29.9 61.1 60.5 
Net impairment (reversal) of lease assets0.4 (2.6)(2.1)(2.6)
Amortization of intangible assets26.4 26.2 52.7 50.5 
Deferred income taxes(8.9)(8.2)(15.2)(13.9)
Net (gain) loss on equity securities14(3.3)5.7 (7.3)4.0 
Share-based compensation1012.0 4.4 27.6 7.6 
Provisions813.3 13.4 23.7 35.1 
Other non-cash items(3.8)4.2 (6.4)4.4 
169.0 148.1 317.2 279.7 
Trade and other receivables(20.3)(44.7)38.1 (41.1)
Unbilled receivables(86.6)(52.5)(175.8)(111.9)
Contract assets(6.5)(9.6)(11.4)(10.7)
Prepaid expenses3.4 6.6 (12.2)(8.7)
Income taxes recoverable(50.7)(15.7)(35.7)(10.4)
Trade and other payables and other accruals4.6 (43.0)(53.6)(97.2)
Deferred revenue18.1 6.4 1.1 1.9 
(138.0)(152.5)(249.5)(278.1)
Net cash flows from (used in) operating activities31.0 (4.4)67.7 1.6 
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Business acquisitions, net of cash acquired4(75.6)(47.6)(75.6)(47.6)
Purchase of investments held for self-insured liabilities6(35.7)(26.0)(51.0)(43.1)
Proceeds from sale of investments held for self-insured
    liabilities
624.8 48.3 31.8 103.7 
Purchase of property and equipment and intangible assets(18.6)(13.3)(40.4)(26.2)
Other0.7 (1.4)6.8 1.6 
Net cash flows used in investing activities(104.4)(40.0)(128.4)(11.6)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Net proceeds from issue of senior unsecured notes and bilateral term credit facility7,15348.8 — 348.8 — 
Net (repayment of) proceeds from revolving credit facility15(85.9)85.3 (29.4)153.3 
Repayment of notes payable and software financing obligations15(8.0)(7.4)(40.3)(46.5)
Net (repayment of) proceeds from bank indebtedness(20.4)22.6 (30.0)43.2 
Net lease payments15(31.6)(35.0)(61.4)(71.8)
Repurchase of shares for cancellation10(10.0)(36.7)(10.0)(65.3)
Proceeds from exercise of share options2.3 5.5 9.3 15.4 
Payment of dividends to shareholders10(21.7)(20.0)(41.7)(38.3)
Net cash flows from (used in) financing activities173.5 14.3 145.3 (10.0)
Foreign exchange (gain) loss on cash held in foreign currency(4.2)7.1 (5.1)2.5 
Net increase (decrease) in cash and cash equivalents95.9 (23.0)79.5 (17.5)
Cash and cash equivalents, beginning of the period131.9 192.2 148.3 186.7 
Cash and cash equivalents, end of the period227.8 169.2 227.8 169.2 
See accompanying notes
F-5
Stantec Inc.


Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-6
Stantec Inc.

Notes to the Unaudited Interim Condensed
Consolidated Financial Statements

1.Corporate Information
The interim condensed consolidated financial statements (consolidated financial statements) of Stantec Inc., its subsidiaries, and its structured entities (the Company) for the two quarters ended June 30, 2023, were authorized for issuance in accordance with a resolution of the Company’s Audit and Risk Committee on August 9, 2023. The Company was incorporated under the Canada Business Corporations Act on March 23, 1984. Its shares are traded on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the symbol STN. The Company’s registered office is located at Suite 300, 10220 - 103 Avenue, Edmonton, Alberta. The Company is domiciled in Canada.

The Company is a provider of comprehensive professional services in the area of infrastructure and facilities for clients in the public and private sectors. The Company’s services include engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics, from initial project concept and planning through to design, construction administration, commissioning, maintenance, decommissioning, and remediation.

2.Basis of Preparation
These consolidated financial statements for the two quarters ended June 30, 2023 were prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. These consolidated financial statements do not include all information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Company’s December 31, 2022 annual consolidated financial statements. These consolidated financial statements are presented in Canadian dollars and all values are rounded to the nearest million ($000,000), except where otherwise indicated.

The accounting policies applied when preparing the Company’s consolidated financial statements are consistent with those followed when preparing the annual consolidated financial statements for the year ended December 31, 2022 except as described in note 3.

The preparation of these consolidated financial statements requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue, and expenses. The significant judgments made by management when applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Company’s December 31, 2022 annual consolidated financial statements.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-7
Stantec Inc.

3.Recent Accounting Pronouncements and Changes to Accounting Policies
a) Recent adoptions
The following amendments became effective on January 1, 2023 and did not have a material impact on the Company's consolidated financial statements:

•In February 2021, the IASB issued Definition of Accounting Estimates (Amendments to IAS 8). The amendments define accounting estimates and clarify the distinction between changes in accounting estimates and changes in accounting policies.

•In February 2021, the IASB issued Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2). The amendments provide guidance to help entities disclose their material (previously "significant") accounting policies.

•In May 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12). The amendments narrow the scope of the recognition exemption so that companies are required to recognize deferred tax for transactions that give rise to equal amounts of taxable and deductible temporary differences, such as leases.

In May 2023, the IASB issued International Tax Reform—Pillar Two Model Rules (Amendments to IAS 12). The amendments provide a mandatory immediate temporary exception to accounting for deferred taxes arising from the Organisation for Economic Co-operation and Development's (OECD) international tax reform and introduce additional disclosure requirements for annual financial statements. The amendments are effective immediately upon issue and are applied retrospectively. The Company has applied the exception to recognising deferred tax assets and liabilities related to Pillar Two income taxes and is assessing the disclosure impact of the amendments on its consolidated financial statements.

b) Future adoptions
The standards, amendments, and interpretations issued before 2023 but not yet adopted by the Company have been disclosed in note 6 of the Company’s December 31, 2022 annual consolidated financial statements. In addition, the IASB issued Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) in May 2023, which introduce new disclosure requirements related to an entity's use of supplier finance arrangements. The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted.

The Company is currently considering the impact of adopting these standards, amendments, and interpretations on its consolidated financial statements.

4. Business Acquisition
On June 30, 2023, the Company acquired all of the shares of Environmental Systems Design, Inc. (ESD), for cash consideration and notes payable. ESD is a 300-person firm headquartered in Chicago. The firm provides building engineering services, specializing in mission critical and data center services. This addition further strengthens the Company’s Buildings operations in the United States cash-generating unit.


Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-8
Stantec Inc.

Details of the consideration transferred and the fair value of the identifiable assets and liabilities acquired at the date of acquisition, including measurement period adjustments for prior acquisitions, were as follows:
NotesTotal
 $
Cash consideration86.7 
Notes payable750.5 
Consideration137.2 
Cash consideration86.7 
Cash acquired11.1 
Net cash paid75.6 
Assets and liabilities acquired
Cash11.1 
Non-cash working capital8.4 
Lease assets14.8 
Intangible assets36.0 
Lease liabilities(11.9)
Other4.3 
Total identifiable net assets at fair value62.7 
Goodwill arising on acquisitions74.5 

Deferred consideration is included as notes payable and has been assessed as part of the business combination and recognized at fair value at the acquisition date.

Trade receivables and unbilled receivables are recognized at fair value at the time of acquisition, and their fair value approximated their net carrying value.

Goodwill consists of the value of expected synergies arising from an acquisition, the expertise and reputation of the assembled workforce acquired, and the geographic location of the acquiree. Tax deductible goodwill and intangible assets arising from the ESD acquisition was $110.5.

Fair value of net assets for current and prior year acquisitions

The preliminary fair values of the net assets recognized in the Company’s consolidated financial statements were based on management’s best estimates of the acquired identifiable assets and liabilities at the acquisition dates. Management finalized the fair value assessments of assets and liabilities purchased from Barton Willmore and L2P during the first two quarters. For ESD, management is reviewing vendor's closing financial statements, purchase adjustments, and other outstanding information. Once the outstanding information is received, reviews are completed, and approvals are obtained, the valuation of acquired assets and liabilities will be finalized.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-9
Stantec Inc.

5.Trade and Other Receivables
June 30, 2023December 31, 2022
$$
Trade receivables, net of expected credit losses of $2.0
(2022 – $2.0)
963.0 988.1 
Holdbacks and other30.3 39.9 
Trade and other receivables993.3 1,028.0 

The aging analysis of gross trade receivables is as follows:
Total1–3031–6061–9091–120121+
$$$$$$
June 30, 2023965.0 592.5 197.0 64.9 33.4 77.2 
December 31, 2022990.1 556.4 246.9 71.6 39.8 75.4 

Information about the Company’s exposure to credit risks for trade and other receivables is included in note 12.

6.Other Assets
June 30, 2023December 31, 2022
Note$$
Financial assets
Investments held for self-insured liabilities
11,14
179.5 156.8 
Holdbacks on long-term contracts37.0 33.7 
Other36.1 27.0 
Non-financial assets
Other17.4 17.3 
270.0 234.8 
Less current portion - financial11.1 9.1 
Less current portion - non-financial1.3 1.1 
Long-term portion257.6 224.6 

Financial assets — Other primarily includes indemnifications, sublease receivables, deposits, and derivative financial instruments (note 12). Non-financial assets - Other primarily includes transactions costs on long-term debt and investment tax credits.

Investments held for self-insured liabilities include government and corporate bonds that are classified as fair value through other comprehensive income (FVOCI) with unrealized gains (losses) recorded in other comprehensive income (loss). Investments also include equity securities that are classified as fair value through profit and loss with gains (losses) recorded in net income.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-10
Stantec Inc.

7.Long-Term Debt
June 30, 2023December 31, 2022
$$
Senior unsecured notes547.5 298.6 
Revolving credit facility500.2 533.0 
Term loan facilities407.7 307.2 
Notes payable88.1 62.4 
Software financing obligations16.4 34.6 
1,559.9 1,235.8 
Less current portion150.2 52.2 
Long-term portion1,409.7 1,183.6 

Interest expense on the Company’s long-term debt and bank indebtedness for the first two quarters of 2023 was $33.4 (June 30, 2022 – $18.5).

Senior unsecured notes
The Company's senior unsecured notes (the notes) consist of:
•$300 of notes that mature on October 8, 2027, bearing interest at a fixed rate of 2.048% per annum; and
•$250 of notes issued on June 27, 2023, that mature on June 27, 2030. The notes bear interest at a fixed rate of 5.393% per annum.

The notes rank pari passu with all other debt and future indebtedness of the Company.

Revolving credit and term loan facilities
The Company has syndicated senior credit facilities, structured as a sustainability-linked loan, consisting of a senior revolving credit facility in the maximum amount of $800 and a senior term loan of $310.0 in two tranches. Additional funds of $600 can be accessed subject to approval and under the same terms and conditions. The revolving credit facility and the term loan are unsecured, may be repaid from time to time at the option of the Company, and mature at various dates before December 8, 2027. On June 16, 2023, the Company also entered into an unsecured bilateral term credit facility of $100 that matures on June 17, 2024. The average interest rate for the revolving credit facility and term loan facilities at June 30, 2023, was 6.78% (December 31, 2022 – 6.09%).

The Company is subject to restrictive covenants related to its revolving credit facility, term loan facilities, and senior unsecured notes, which are measured quarterly. These covenants are consistent with those disclosed in the Company’s annual consolidated financial statements for the year ended December 31, 2022. The Company was in compliance with these covenants as at and throughout the two quarters ended June 30, 2023.

Bank indebtedness
The Company has an uncommitted unsecured multicurrency credit facility of up to £20 that is repayable on demand. The average interest rate for the facility at June 30, 2023, was 6.38% (December 31, 2022 - 5.18%) and the amount drawn was $23.6 (December 31, 2022 - $24.6).

Bank indebtedness also includes overdrafts drawn under the terms of the Company’s syndicated senior credit facilities payable in US funds of $11.8 (December 31, 2022 - $28.1 payable in US funds and $12.7 payable in Canadian funds).



Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-11
Stantec Inc.

Notes payable
Notes payable consists primarily of notes payable for acquisitions and are due at various times from 2023 to 2026. Repayment is contingent on selling shareholders complying with the terms of the acquisition agreements. The weighted average interest rate on the notes payable at June 30, 2023, was 3.83% (December 31, 2022 – 1.6%).

Software financing obligations
The Company has financing obligations for software, included in intangible assets, bearing interest at rates up to 5.94% (December 31, 2022 - up to 5.94%). These obligations expire at various dates before October 2027.

Letter of credit and surety facilities
The Company has a separate letter of credit facility outside of its revolving credit facility that provides letters of credit up to $100. At June 30, 2023, $68.9 (December 31, 2022 – $66.9) in aggregate letters of credit outside of the Company’s credit facilities were issued and outstanding. These were issued in various currencies. Of these letters of credit, $56.7 (December 31, 2022 – $54.6) expire at various dates before July 2024 and $12.3 (December 31, 2022 – $12.3) have open-ended terms.

The Company has surety facilities related to Construction Services (which was sold in 2018), to accommodate the issuance of bonds for certain types of project work. At June 30, 2023, the Company retained bonds of $19.1 (December 31, 2022 – $27.1) in US funds under these surety facilities that will expire on completion of the associated projects. The estimated completion dates of these projects are before May 2024. Although the Company remains obligated for these instruments, the purchaser of the Construction Services business has indemnified the Company for any obligations that may arise from these bonds.

The Company also has $19.8 (December 31, 2022 - $18.8) in bonds for our continuing operations that will expire on completion of the associated projects. The estimated completion dates of these projects are before August 2029.

8.Provisions
Self-
insured
liabilities		ClaimsLease
restoration		Onerous contractsTotal
$$$$$
January 1, 2023
94.6 52.6 17.5 33.1 197.8 
Current period provisions10.2 2.5 7.2 3.8 23.7 
Paid or otherwise settled(8.7)(7.7)(4.1)(6.7)(27.2)
Impact of foreign exchange(1.6)(0.9)(0.2)(0.2)(2.9)
94.5 46.5 20.4 30.0 191.4 
Less current portion7.3 22.3 2.6 15.3 47.5 
Long-term portion87.2 24.2 17.8 14.7 143.9 

Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-12
Stantec Inc.

9.Other Liabilities
June 30, 2023December 31, 2022
Note$$
Cash-settled share-based compensation
10
55.6 60.4 
Other6.0 9.2 
61.6 69.6 
Less current portion28.1 36.0 
Long-term portion33.5 33.6 
10.Share Capital
Authorized
UnlimitedCommon shares, with no par value
UnlimitedPreferred shares issuable in series, with attributes designated by the board of directors

Common shares
The Company has approval to repurchase up to 5,538,309 common shares and an Automatic Share Purchase Plan (ASPP) which allows a broker, in its sole discretion and based on the parameters established by the Company, to purchase common shares for cancellation under the Normal Course Issuer Bid (NCIB) at any time during predetermined trading blackout periods. During the first two quarters of 2023, 129,036 common shares were repurchased for cancellation pursuant to the NCIB at a cost of $10.0 (June 30, 2022 - 1,085,676 shares were repurchased at a cost of $65.3). As at June 30, 2023 and December 31, 2022, no liability was recorded in the Company’s consolidated statements of financial position in connection with the ASPP.
Dividends
Holders of common shares are entitled to receive dividends when declared by the Company’s board of directors. The table below describes the dividends paid in 2023:
Dividend per SharePaid
Date DeclaredRecord DatePayment Date$$
November 10, 2022December 30, 2022January 17, 20230.180 20.0 
February 22, 2023March 31, 2023April 17, 20230.195 21.7 
May 10, 2023June 30, 2023July 17, 20230.195 — 

At June 30, 2023, trade and other payables included $21.6 related to the dividends declared on May 10, 2023.

Share-based payment transactions

During the second quarter of 2023, the Company recognized a net share-based compensation expense of $12.0 (June 30, 2022 - $4.4) in administrative and marketing expenses in the consolidated statements of income, comprised of share-based compensation expense of $14.7 (June 30, 2022 - $1.2) offset by a hedge impact of $2.7 (June 30, 2022 - $3.2) (note 12).

During the first two quarters of 2023, the Company recognized a net share-based compensation expense of $27.6 (June 30, 2022 - $7.6), in administrative and marketing expenses in the consolidated statements of income, comprised of share-based compensation expense of $35.5 (June 30, 2022 - $0.9) offset by a hedge impact of $7.9 (June 30, 2022 - $6.7) (note 12).

Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-13
Stantec Inc.

During the first two quarters of 2023, the Company granted 177,897 Performance Share Units (PSUs) at a fair value of $15.7 (June 30, 2022 - 253,938 units for $14.5) and 118,259 Restricted Share Units (RSUs) at a fair value of $9.5 (June 30, 2022 - 145,884 units for $8.0), under the same terms, conditions, and vesting requirements as the units issued in 2022. Also, during the first two quarters of 2023, 284,209 PSUs were paid at a value of $28.2 (June 30, 2022 - 318,058 PSUs were paid at a value of $15.2) and 127,173 RSUs were paid at a value of $10.2 (June 30, 2022 - 147,811 were paid at a value of $8.0).

At June 30, 2023, the accrued obligations for PSUs of $26.4 (December 31, 2022 - $32.8), Restricted Share Units (RSUs) of $10.8 (December 31, 2022 - $12.7), and Deferred Share Units (DSUs) of $18.4 (December 31, 2022 - $14.9) were recorded in other liabilities (note 9).

11.Fair Value Measurements
All financial instruments carried at fair value are categorized into one of the following:
•Level 1 – quoted market prices
•Level 2 – valuation techniques (market observable)
•Level 3 – valuation techniques (non-market observable)
When forming estimates, the Company uses the most observable inputs available for valuation purposes. If a fair value measurement reflects inputs of different levels within the hierarchy, the financial instrument is categorized based on the lowest level of significant input.

When determining fair value, the Company considers the principal or most advantageous market in which it would transact and the assumptions that market participants would use when pricing the asset or liability. The Company measures certain financial assets and liabilities at fair value on a recurring basis.

For financial instruments recognized at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorizations at the end of each reporting period.

In the first two quarters of 2023, no changes were made to the method of determining fair value and no transfers were made between levels of the hierarchy.

The following tables summarize the Company’s fair value hierarchy for those assets and liabilities measured and adjusted to fair value on a recurring basis:
Carrying
Amount		Level 1Level 2Level 3
At June 30, 2023
Notes$$$$
Assets
Investments held for self-insured liabilities6179.5 — 179.5 — 
Derivative financial instruments
6,129.5 — 9.5 — 
Liabilities
Notes payable
788.1 — — 88.1 
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-14
Stantec Inc.

Carrying
Amount		Level 1Level 2Level 3
At December 31, 2022
Notes$$$$
Assets
Investments held for self-insured liabilities6156.8 — 156.8 — 
Derivative financial instruments6,123.1 — 3.1 — 
Liabilities
Notes payable762.4 — — 62.4 
Derivative financial instruments9,122.3 — 2.3 — 

Investments held for self-insured liabilities consist of government and corporate bonds and equity securities. Fair value of bonds is determined using observable prices of debt with characteristics and maturities that are similar to the bonds being valued. Fair value of equities is determined using the reported net asset value per share of the investment funds. The funds derive their value from observable quoted prices of the equities owned that are traded in an active market.

The fair value of notes payable is not based on observable market data and as such, the valuation method is classified as level 3 in the fair value hierarchy. For payments with terms greater than one year, the estimated liability is discounted using an appropriate rate of interest.

The following tables summarize the Company’s fair value hierarchy for those liabilities that were not measured at fair value but are required to be disclosed at fair value on a recurring basis:
Carrying
Amount		Level 1Level 2Level 3
At June 30, 2023
Note$$$$
Senior unsecured notes7547.5 — 502.8 — 
Carrying
Amount		Level 1Level 2Level 3
At December 31, 2022
Note$$$$
Senior unsecured notes7298.6 — 259.8 — 

The fair value of senior unsecured notes is determined by calculating the present value of future payments using observable benchmark interest rates and credit spreads for debt with similar characteristics and maturities.

12.Financial Instruments
a)Derivative financial instruments

Total return swaps on share-based compensation units
The Company has total return swap (TRS) agreements with financial institutions to manage its exposure to changes in the fair value of the Company's shares for certain cash-settled share-based payment obligations. The Company has designated the TRSs related to its RSUs as a cash flow hedge, with a notional amount of $22.2 maturing between 2024 and 2026. During the first two quarters of 2023, the TRSs related to the Company's RSUs had an unrealized gain of $3.2 ($2.5 net of tax) (June 30, 2022 - unrealized loss of $1.5 ($1.2 net of tax)) which was recognized in other comprehensive income (loss) and a gain of $4.0 (June 30, 2022 - loss of $3.9) was reclassified to the consolidated statements of income, in administrative and marketing expenses. The TRSs related to the Company's DSUs, for which hedge accounting was not applied, had an unrealized gain of $4.0 (June 30, 2022 – unrealized loss of $2.8) which was recognized in administrative and marketing expenses in the consolidated statements of income.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-15
Stantec Inc.

b)Nature and extent of risks
The conflict in Ukraine and the transition to higher inflationary environments have had adverse financial impacts on the global economy, but the Company has not seen a significant increase to its risk exposure. Management continues to closely monitor the impacts on the Company’s risk exposure and will adjust its risk management approach as necessary.

Credit risk
Assets that subject the Company to credit risk consist primarily of cash and cash equivalents, trade and other receivables, unbilled receivables, contract assets, investments held for self-insured liabilities, holdbacks on long-term contracts, and other financial assets. The Company’s maximum amount of credit risk exposure is limited to the carrying amount of these assets, which at June 30, 2023, was $2,312.7 (December 31, 2022 – $2,031.1).

The Company limits its exposure to credit risk by placing its cash and cash equivalents in high-quality credit institutions. Investments held for self-insured liabilities include corporate bonds and equity securities. The Company believes the risk associated with corporate bonds and equity securities is mitigated by the overall quality and mix of the Company’s investment portfolio. Substantially all bonds held by the Company are investment grade, and none are past due. The Company monitors changes in credit risk by tracking published external credit ratings.

The Company mitigates the risk associated with trade and other receivables, unbilled receivables, contract assets, and holdbacks on long-term contracts by providing services to diverse clients in various industries and sectors of the economy. In addition, management reviews trade and other receivables past due on an ongoing basis to identify matters that could potentially delay the collection of funds at an early stage. The Company does not concentrate its credit risk in any particular client, industry, or economic or geographic sector.

The Company monitors trade receivables to an internal target of days of revenue in trade receivables. At June 30, 2023, the days of revenue in trade receivables were 54 days (December 31, 2022 – 62 days).

Price risk
The Company’s investments held for self-insured liabilities are exposed to price risk arising from changes in the market values of the equity securities. This risk is mitigated because the portfolio of equity funds is monitored regularly and appropriately diversified. For the Company's investments held for self-insured liabilities, a 5% increase
or decrease in equity prices at June 30, 2023, would increase or decrease the Company’s net income by $2.6 (June 30, 2022 - $0.8), respectively.

The Company is also exposed to changes in its share price arising from its cash-settled share-based payments as the Company's obligation under these arrangements are based on the price of the Company's shares. The Company mitigates a portion of its exposure to this risk for its RSUs and DSUs by entering into TRSs. For PSUs, a 10% increase or decrease in the price of the Company's shares at June 30, 2023, would decrease or increase the Company’s net income by $2.0 (June 30, 2022 - $0.8), respectively.

Liquidity risk
The Company meets its liquidity needs through various sources, including cash generated from operations, issuing senior unsecured notes, borrowings from its $800 revolving credit facility, term loan facilities, multicurrency credit facility, and the issuance of common shares. The unused capacity of the credit facilities at June 30, 2023, was $295.7 (December 31, 2022 – $231.8) and the Company also has access to additional funds of $600 under its syndicated credit facilities (note 7). The Company believes that it has sufficient resources to meet obligations associated with its financial liabilities.

Interest rate risk
The Company is subject to interest rate cash flow risk to the extent that its credit and term loan facilities are based on floating interest rates. The Company is also subject to interest rate pricing risk to the extent that its investments held for self-insured liabilities include fixed-rate government and corporate bonds. If the interest rate on the Company’s
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-16
Stantec Inc.

credit and term loan facilities at June 30, 2023, was 1% higher or lower, with all other variables held constant, net income would decrease or increase by $3.6 (June 30, 2022 - $3.2), respectively.

Foreign exchange risk
Foreign exchange risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Foreign exchange gains or losses in net income arise on the translation of foreign currency-denominated assets and liabilities (such as trade and other receivables, trade and other payables, and long-term debt) held in the Company's Canadian operations and foreign subsidiaries. The Company manages its exposure to foreign exchange fluctuations on these items by matching foreign currency assets with foreign currency liabilities and, from time to time, through the use of foreign currency forward contracts.

Foreign exchange fluctuations may also arise on the translation of the Company's US-based subsidiaries or other foreign subsidiaries, where the functional currency is different from the Canadian dollar, and are recorded in other comprehensive income. During the first two quarters of 2023, the Company recorded exchange losses on translation of foreign operations of $55.3 through other comprehensive income (loss), of which $42.5 related to goodwill. The Company does not hedge for this foreign exchange risk.

13.Employee Costs
For the quarter ended
June 30,		For the two quarters ended
June 30,
2023202220232022
Note$$$$
Wages, salaries, and benefits923.7 815.5 1,820.2 1,591.7 
Pension costs28.2 24.1 53.1 44.6 
Net share-based compensation10,1212.0 4.4 27.6 7.6 
Total employee costs963.9 844.0 1,900.9 1,643.9 
Direct labor584.7 514.0 1,153.2 997.0 
Indirect labor379.2 330.0 747.7 646.9 
Total employee costs963.9 844.0 1,900.9 1,643.9 

Direct labor costs include salaries, wages, and related fringe benefits (including pension costs) for labor hours directly associated with the completion of projects. Bonuses, share-based compensation, termination payments, and salaries, wages, and related fringe benefits (including pension costs) for labor hours not directly associated with the completion of projects are included in indirect labor costs. Indirect labor costs are included in administrative and marketing expenses in the consolidated statements of income.

14.Other (Income) Loss
For the quarter ended
June 30,		For the two quarters ended
June 30,
2023202220232022
$$$$
Realized gain on equity securities— (6.8)(0.1)(14.5)
Unrealized (gain) loss on equity securities(3.3)12.5 (7.2)18.5 
Other0.1 0.6 (2.7)— 
Total other (income) loss(3.2)6.3 (10.0)4.0 

Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-17
Stantec Inc.

15.Cash Flow Information
A reconciliation of liabilities arising from financing activities for the two quarters ended June 30, 2023, is as follows: 
Senior Unsecured NotesRevolving Credit and Term Loan FacilitiesNotes
Payable		Software Financing ObligationsLease LiabilitiesTotal
$$$$ $$
January 1, 2023
298.6 840.2 62.4 34.6 621.4 1,857.2 
Statement of cash flows
Net proceeds (repayments)250.0 70.6 (22.1)(18.2)(61.4)218.9 
Transaction costs(1.2)— — — — (1.2)
Non-cash changes
Foreign exchange— (3.4)(0.1)(0.3)(7.9)(11.7)
Additions and modifications— — 50.3 — 43.3 93.6 
Other0.1 0.5 (2.4)0.3 2.2 0.7 
June 30, 2023547.5 907.9 88.1 16.4 597.6 2,157.5 

A reconciliation of liabilities arising from financing activities for the two quarters ended June 30, 2022, is as follows: 
Senior Unsecured NotesRevolving Credit Facility and Term LoanNotes
Payable		Software Financing ObligationsLease LiabilitiesTotal
$$$$ $$
January 1, 2022
298.2 851.2 64.7 31.0 668.9 1,914.0 
Statement of cash flows
Net proceeds (repayments)— 153.3 (32.5)(14.0)(71.8)35.0 
Non-cash changes
Foreign exchange— 2.4 (2.3)— (3.2)(3.1)
Additions and modifications— — 26.1 8.8 21.3 56.2 
Other0.2 0.6 0.1 1.5 — 2.4 
June 30, 2022298.4 1,007.5 56.1 27.3 615.2 2,004.5 

For the quarter ended
June 30,		For the two quarters ended
June 30,
2023202220232022
$$$$
Supplemental disclosure
Income taxes paid, net of recoveries
83.6 42.5 91.6 55.0 
Interest paid, net of receipts
21.1 15.6 40.4 25.6 

Interest on lease liabilities during the second quarter of 2023 was $5.9 (June 30, 2022 - $5.5). Interest on lease liabilities during the first two quarters of 2023 was $12.2 (June 30, 2022 - $11.3).

16.Segmented Information
The Company provides comprehensive professional services in the area of infrastructure and facilities throughout North America and globally. It considers the basis on which it is organized, including geographic areas, to identify its reportable segments. Operating segments of the Company are defined as components of the Company for which separate financial information is available and are evaluated regularly by the chief operating decision maker when allocating resources and assessing performance. The chief operating decision maker is the CEO of the Company, and the Company’s operating segments are based on its regional geographic areas.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-18
Stantec Inc.


The Company’s reportable segments are Canada, United States, and Global. These reportable segments provide professional consulting in engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics services in the area of infrastructure and facilities.

Segment performance is evaluated by the CEO based on project margin and is measured consistently with project margin in the consolidated financial statements. Inter-segment revenues are eliminated on consolidation and reflected in the Adjustments and Eliminations column. Reconciliations of project margin to net income before taxes is included in the consolidated statements of income.

Reportable segments
For the quarter ended June 30, 2023
CanadaUnited StatesGlobalTotal
Segments		Adjustments
and
Eliminations		Consolidated
$$$$$$
Total gross revenue377.9 922.1 365.2 1,665.2 (27.0)1,638.2 
Less inter-segment revenue13.7 8.6 4.7 27.0 (27.0)— 
Gross revenue from external
customers
364.2 913.5 360.5 1,638.2 — 1,638.2 
Less subconsultants and other direct
expenses
43.9 246.3 69.3 359.5 — 359.5 
Total net revenue320.3 667.2 291.2 1,278.7 — 1,278.7 
Project margin172.7 363.7 157.6 694.0 — 694.0 

For the quarter ended June 30, 2022
CanadaUnited StatesGlobalTotal
Segments		Adjustments
and
Eliminations		Consolidated
$$$$$$
Total gross revenue339.4 748.3 325.2 1,412.9 (36.3)1,376.6 
Less inter-segment revenue9.2 11.5 15.6 36.3 (36.3)— 
Gross revenue from external
customers
330.2 736.8 309.6 1,376.6 — 1,376.6 
Less subconsultants and other direct
expenses
38.6 170.9 50.4 259.9 — 259.9 
Total net revenue291.6 565.9 259.2 1,116.7 — 1,116.7 
Project margin154.6 310.9 137.2 602.7 — 602.7 


Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-19
Stantec Inc.

For the two quarters ended June 30, 2023
CanadaUnited StatesGlobalTotal
Segments		Adjustments
and
Eliminations		Consolidated
$$$$$$
Total gross revenue733.3 1,780.1 729.9 3,243.3 (65.9)3,177.4 
Less inter-segment revenue25.0 22.1 18.8 65.9 (65.9)— 
Gross revenue from external
customers
708.3 1,758.0 711.1 3,177.4 — 3,177.4 
Less subconsultants and other direct
expenses
85.0 447.6 137.6 670.2 — 670.2 
Total net revenue623.3 1,310.4 573.5 2,507.2 — 2,507.2 
Project margin334.8 714.9 304.3 1,354.0 — 1,354.0 

For the two quarters ended June 30, 2022
CanadaUnited StatesGlobalTotal
Segments		Adjustments
and
Eliminations		Consolidated
$$$$$$
Total gross revenue657.8 1,460.5 641.2 2,759.5 (69.0)2,690.5 
Less inter-segment revenue18.3 21.5 29.2 69.0 (69.0)— 
Gross revenue from external
customers
639.5 1,439.0 612.0 2,690.5 — 2,690.5 
Less subconsultants and other direct
expenses
73.9 342.1 107.7 523.7 — 523.7 
Total net revenue565.6 1,096.9 504.3 2,166.8 — 2,166.8 
Project margin299.7 601.4 268.7 1,169.8 — 1,169.8 

The following tables disclose the disaggregation of non-current assets by geographic area and revenue by geographic area and services:

Geographic information
Non-Current AssetsGross Revenue
June 30, 2023December 31, 2022For the quarter ended
June 30,		For the two quarters ended
June 30,
2023202220232022
$$$$$$
Canada600.2 618.4 364.2 330.2 708.3 639.5 
United States2,024.5 1,982.0 913.5 736.8 1,758.0 1,439.0 
United Kingdom207.6 202.2 115.9 100.0 235.8 193.0 
Australia394.6 421.2 118.1 112.8 235.7 226.3 
Other global geographies159.0 164.1 126.5 96.8 239.6 192.7 
3,385.9 3,387.9 1,638.2 1,376.6 3,177.4 2,690.5 

Non-current assets consist of property and equipment, lease assets, goodwill, and intangible assets. Geographic information is attributed to countries based on the location of the assets.

Gross revenue is attributed to countries based on the location of the project.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-20
Stantec Inc.

Gross revenue by services
For the quarter ended
June 30,		For the two quarters ended
June 30,
2023202220232022
$$$$
Infrastructure448.8 387.0 861.3 756.6 
Water341.7 283.2 669.4 549.4 
Buildings295.6 245.6 586.7 488.0 
Environmental Services357.3 301.0 678.9 585.3 
Energy & Resources194.8 159.8 381.1 311.2 
Total gross revenue from external customers1,638.2 1,376.6 3,177.4 2,690.5 

Performance will fluctuate quarter to quarter. The first and fourth quarters historically have lower revenue generation and project activity because of holidays and weather conditions in the northern hemisphere. Despite this quarterly fluctuation, the Company has concluded that it is not highly seasonal in accordance with IAS 34.

Customers
The Company has a large number of clients in various industries and sectors of the economy. No particular customer exceeds 10% of the Company’s gross revenue.

17.Event after the Reporting Period

Dividends
On August 9, 2023, the Company declared a dividend of $0.195 per share, payable on October 16, 2023, to shareholders of record on September 29, 2023.


Notes to the Unaudited Interim Condensed Consolidated Financial Statements
In millions of Canadian dollars except number of shares and per share data
June 30, 2023
F-21
Stantec Inc.

Exhibit 99.3 - Certification of Interim Filings – President and Chief Executive Officer

CERTIFICATION OF INTERIM FILINGS

I, GORDON A. JOHNSTON, certify the following:

1.I have reviewed the quarterly report for the period ended June 30, 2023 (this “report”) of Stantec Inc. (the “issuer”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4.The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5.    The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
Date: August 9, 2023
/s/ Gordon A. Johnston
GORDON A. JOHNSTON, M. ENG., P. ENG
President and Chief Executive Officer



Exhibit 99.4 - Certification of Interim Filings – Executive Vice President and Chief Financial Officer

CERTIFICATION OF INTERIM FILINGS

I, THERESA B. Y. JANG, certify the following:
1.I have reviewed the quarterly report for the period ended June 30, 2023 (this “report”) of Stantec Inc. (the “issuer”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4.The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5.    The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: August 9, 2023
/s/ Theresa B. Y. Jang
THERESA B. Y. JANG
Executive Vice President and Chief Financial Officer

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