Annual Report 2020 - Stantec

1 Annual Report 2020 TABLE OF CONTENTS3 Message from Our CEO and Board Chair4 What We Do: Supporting a Sustainable Future6 Strategic Progress8 2020 financial Highlights10 Where We AreM-1 Management s Discussion and AnalysisF-1 Consolidated financial StatementsSage Grouse Survey Elko, Nevada, USA22020 Stantec Annual REPORTMESSAGE FROM OUR CEO AND BOARD CHAIRIn 2020, a year marked by unprecedented business disruption caused by the COVID-19 pandemic, Stantec demonstrated its operational resilience. The diversity of our business, our global reach, and our deep connections to our clients and communities served as strengths as we weathered the storm. One of our core values We Are Better Together came to life in a very meaningful and inspiring way.

2 In the face of hardships and challenges, Stantec s team united as one. Underpinned by creativity, innovation, and efficient project delivery, Stantec was among the first called upon to respond to the pandemic by helping clients and communities build capacity and resilience. This, together with our broader commitment to keeping ourselves and our communities safe, reinforced Stantec s proud legacy of excellence, innovation, people, and growth. As we look back on 2020 it s clear that there has been a global shift in priorities and that sustainable development is now even more of a priority for clients and communities. That s why Stantec was proud to have capped off 2020 with two major sustainability accolades. In November, CDP (formerly the Carbon Disclosure Project) recognized Stantec as a climate leader by awarding us a score of A-, making Stantec the only firm in our industry to achieve this rating for the last three consecutive years.

3 And just weeks later, Stantec was named the fifth most sustainable company in the world and first in North America by Corporate Knights. Stantec is the only engineering and design firm in the world included in Corporate Knights Top 100 list. Our strong financial performance in 2020 demonstrates the resiliency of our business model and our employee base. We would like to acknowledge and thank our employees around the world for their tremendous contributions this year, their commitment to our clients, and to supporting one another. We would also like to thank our board of directors for their wise counsel through these unprecedented times. Stantec enters 2021 well positioned to meet its long-term strategic targets and remains committed to delivering long-term sustainable growth for our clients, employees and shareholders.

4 With a strong balance sheet, an enviable backlog, and a healthy acquisition pipeline, we are ready to deliver continued growth in 2021. Gord Johnston President and CEO Stantec Douglas K. Ammerman Chair Stantec Board of DirectorsSTANTEC WE DO: SUPPORTING A SUSTAINABLE FUTUREC reating communities through engineering and design is our business. But our passion is designing a sustainable future. Our approach to sustainability is ingrained in our DNA. You see this in the way we operate our business, the way we put our people first, and in our commitment to design with community in mind. Around the world, we are working with clients and communities to build resilience, reduce emissions, and improve quality of life through access to clean water, sustainable energy, conservation, and ecosystem restoration.

5 We are proud to be one of the top-ranked engineering and design firms in the world, and in 2020, we further strengthened our position with several industry-leading environmental, sustainability, and governance rankings. To learn more about sustainability at Stantec , including our pledge to achieving carbon neutrality and operational net zero, : A- Stantec is the only engineering and design firm that has been rated a Climate Leader with an A- score by CDP for the last three years. (October 14, 2020)ISS ESG: PrimeStantec has received a Prime Corporate ESG Performance rating by ISS. Stantec s ESG Quality Scores for ESG are all 1 (The highest possible). (February 5, 2021)ESG Risk: LowStantec s ESG risk is rated as low by Sustainalytics, which is top of class in the engineering and design space.

6 (January 7, 2021)Canada s Best Employers2020 ForbesWorld s Best Employers2020 ForbesAmerica s Best Employers for Women2020 ForbesGender Equality Index2021 Bloomberg#5 Ranked fifth most sustainable corporation in the world2021 Corporate Knights Global 100#1 Ranked most sustainable corporation in North America2020 Stantec Annual REPORT428% 21% 21% 15 % 15 % BuildingsWaterEnvironmental ServicesEnergy & ResourcesInfrastructure650+ LEED-certified projects35+ net zero-designed buildings1,650 water treatment facilities67 billion liters of water treated every day40,000+ acres restored1,000+ miles of streams and rivers restored37+ GW solar & wind renewable energy generation capacity delivered115+ GW hydro renewable energy generation capacity delivered15 0 + Envision Sustainability Professionals12 Envision-certified projects2020 Net Revenue Percentage5 Stantec aim to grow and diversify sustainably for the benefit of our clients, employees, and shareholders.

7 We will do this through a client-centric framework with four value Revenue>10 % CAGRA djusted EBITDA Margin16 -17%of Net RevenueAdjusted Earnings per Share>11%CAGRA djusted Return on Invested Capital>10 % Stantec S STRATEGYOur 2023 TargetsWarragamba DamWarragamba, New South Wales, Australia 62020 Stantec Annual REPORTC arbon Net Zero by2030 After achieving carbon neutrality in 2022, Stantec has committed to achieving net-zero operations by VehiclesGenAVMoved into the autonomous vehicles space with the establishment of Stantec Equity 3%Base pay gap in North America of only 3% on a median compa ratio basis. We will continue to focus on closing this gap a adjusted return on invested capital in 2020, up from in Neutrality by2022 Stantec has pledged to be carbon neutral for 2022 (SaaS)IAOperationalized InsightAnalytics, a suite of tools and models for the optimization water and wastewater Tu r n ove r8%Voluntary turnover rate of approximately 8% in 2020, which continues to be 2% to 3% better than industry Backlog Growth3.

8 1%Increased backlog by to $ billion from December 31, 2019 representing organic EstateOptimization30%Targeted reduction in existing real estate footprint by (SaaS)FAMSO perationalized the financial Analysis and Management System web-based product for the financial planning consultative GEII ncluded in the 2021 Bloomberg Gender-Equality Index (GEI), for public companies committed to advancing women s equality in the 3 Completed three acquisitions in the fourth quarter of 2020 for an aggregate $ million, adding ~400 PROGRESSE xcellenceWe will drive earnings growth through exceptional project execution and efficient operations. InnovationWe will continue to develop leading-edge technologies to serve our clients and enhance our will provide a workplace that attracts, engages, rewards, and retains the best talent in the will create shareholder value and grow earnings through a combination of organic growth and disciplined capital Town Centre Phase OneBurnaby, British Columbia, Canada2020 financial HIGHLIGHTSO perating cash flowFree cash flow$0$200$400$600$8001617181920YE$0$30$ 60$90$120$1501617181920 Share repurchaseDividendsAdjusted EBITDA $0$100$200$300$400$500$600YE16171819 PostIFRS 1620 PostIFRS 16$0$50$100$150$200$2501617181920 Adjusted net incomeNet income$0$2,000$4,000$6.

9 000 Gross revenue Net revenueYE1617181920 Diluted EPSA djusted diluted EPS$ $ $ $ $ $ Services operations are presented as discontinued operations. Results for 2019 and 2020 were accounted for using IFRS 16 and IAS 17 for years prior. Gross and net revenue were accounted for using IFRS 15 for 2020, 2019 and 2018 and IAS 11 for years prior. EBITDA, adjusted EBITDA, adjusted net income, and adjusted diluted EPS are non-IFRS measures discussed in the Definition section of the 2020 Annual Report . The financial results reflect the continuing operations of the company, except for cash flow which is on a consolidated Net IncomeCapital Returned to ShareholdersFree CashflowAdjusted Diluted Earnings per Share (C$)Gross Revenue and Net RevenueAdjusted EBITDA millions (C$) except per share amounts2020 Stantec Annual REPORT82020 diluted EPS growth (2020 v 2019) net income growth (2020 v 2019)15.

10 7 %Adjusted EBITDA debt to adjusted return on invested capitalSTANTEC WE ARE2020 Net Revenue by Reportable Segments $ ,000 Employees350 Office locations53% United StatesCanada 29%Global 18%2020 Stantec Annual REPORT10 Index to Management's Discussion and AnalysisBusiness Model 1 Strategic Plan1 Impact of COVID-19 Pandemic62020 financial Highlights72020 Fourth Quarter Highlights10 financial Targets11 Outlook11 financial Performance13 Fourth Quarter Results18 Quarterly Trends20 Statements of financial Position21 Liquidity and Capital Resources22 Critical accounting Estimates, Developments, and Measures28 Critical accounting Estimates28 accounting Developments28 Materiality29 Definition of Non-IFRS Measures29 Risk Factors30 Controls and Procedures38 Subsequent Events39 Cautionary Note Regarding Forward-Looking Statements39 Management s Discussion and AnalysisFebruary 24, 2021 This discussion and analysis of Stantec Inc.