Q1 2020 Earnings Call
Well sure mid downstream if you good morning, ladies and gentlemen, you have yet I coffeehouse any funny. So maybe if you stop fees, how steep plenty peanuts and except you Didnt Bank did do covey SP won't come to double U.S.P. first quarter 20, TWIC <unk> results conference call.
Now I'd like to kind of meeting we'll go to quite good weather advisor Investor Relations.
Uh-huh. Please go ahead mr. weather.
[laughter].
Good morning, all we hope that you're all safe and doing well. Thanks for taking that so I'm just trying to call today through which will be discussing Mercury 120, 20 performance followed by <unk> acuity session, whereas today or Alexandre our president and CEO and let me show our CFO.
Please note that this call. These actions also accessible on their website via webcast.
During the call we may be making some forward looking statements and actual results could be different from those expressed or implied we undertake no obligation to update or revise any of these statements relevant factors that could cause actual results to differ materially from those forward looking statements listed in our most recent management discussion and then.
Oh, yes.
Also during the call we may refer to certain nightmarish measures. These measures are defined in our DNA for the first quarter of 2020, I smell SRM DNA for the your ended December 31st it doesn't like gene both of which can be found on SEDAR and on the website.
And again. It also includes reconciliations of non <unk> first measures to the most directly comparable I first measures management believes that these nice various measures provide useful information to investors regarding the corporations financial condition and the results of accretion as they provide additional geometrics outfits performance based on my first measures.
Not pick a nice underwrite tourists do not have any answer any standardized meaning prescribed underway service and may differ from similarly named measures as reported by Gotta ratios and accordingly, we may not be comfortable.
These measures should not be viewed as a subsistence project related financial information prepared in accordance with all your Paris with that I will now turn to call over to what extent.
Thank you good Quintin and a good morning, everyone [laughter] as we find ourselves and these on a precedent times. It is only fitting to begin by providing an overview of our response to the impacts of coven 19 before getting into the details of.
Our Q1 performance.
I would first like to thank our employees for exemplifying resilience in the face of the cold at 19 pandemic and this unparalleled global challenges.
Since the onset our top priority remains screen should the safety of or people are clients and the communities within which we operate.
As the global response to preventing the spread of Coogan 19 quickly extended to stay at home government orders and business continue to plans were put into effect immediately and trained at our workforce would be able to continue to serve our clients and communities remotely.
Leveraging our technology investments our teams f. quickly shifted and embraced the digital approach to deliver projects and pursue new assignments.
For employees work currently conducting their work on project sites. They have been given guidance to ensure our rigorous safety protocols are tough on line with additional consideration for social distancing incorporated.
And most of WSP as major odds many of the services or projects are considered essential services.
Such we have maintained good productivity levels to date and our clients have generally we remain committed to their projects.
Particularly in the public sector.
During this crisis, we are extremely proud to be able to help our health care clients globally, who are under extreme pressure to provide rapid responses to the spend dynamic.
We have had the privilege to player expertise to build capacity and feel hospitals modular expansions temporary quarantine facilities adapting existing health care facilities and converting industrial facilities.
We have also been called upon to expedite hospital construction projects to be able to support the Kobin 19 response.
Our expert has continued to exemplified their agility and commitment to delivering solutions in a ever changing environment.
Before we dive into the granularity of our quarter, let me start off by saying that we are pleased with the underlying operational performance of our regions.
As we posted organic growth, we generated EBITDA margin inline with our expectations, we experienced strong backlog growth good cash flow collection and finished the quarter with a solid balance sheet.
Even though the first quarter, if 2020 had one less billable day, it was complete with volatility and uncertainty.
Our Asian operation were impacted by Coogan 19 early in the quarter Pherson mainland China, followed by Hong Kong, and then southeast Asia accounting for approximately 6% of our employees.
In parallel our UK operation, we're dealing with the uncertain political and business environment brought forward by Brexit.
Our western Canadian operation were adversely impacted directly and indirectly and directly.
The significant drop into price of the barrel due to lack of demand at the start of the year, which was followed by a pricing war between Saudi Arabia, and Russia for causing the priced plummets.
Certainly cannot ignore the extreme market than currency volatility that took place in the first quarter that led to two distinct noncash items impacting right, yes for the quarter, which I'll they will discuss in greater detail shortly.
WSP has entered 220 20 and this crisis in the strong position.
And now during these challenging times with close to 40 to 45000 of our employees working remotely I believed that we will come out of discipline dynamic on the other side and equally strong organization things to our people and management team.
I would now like to turn our discussion to the performance of our segments starting with their Canadian operations.
Aside from our Western Canadian transportation, Dramatics, and oil and gas business that were impacted for the reason mentioned earlier.
The remainder of or Canadian operation performed very well.
And our organic growth would have stood at 4.3% slick waters.
Excluding the yen markets that I just mentioned.
Our Canadian reportable segment posted a slight decrease in net revenues of 0.6% and delivered adjusted EBITDA by segment and adjusted EBITDA margin by segment of 37.3 million and 15.3% respectively.
These metrics waiting to get to negatively affected by lower performance in Western Canada, as well as severance cost a month amounting to 4.4 million related to the continuous operational optimization.
Of our Canadian business.
Our backlog in Canada remained flat compared to Q4 2019. However, it grew organically by 8% compared to Q1 of 19.
Our Americas reportable segment posted organic growth in net revenues of 1.5%.
The region delivered adjusted EBITDA by segment and adjusted EBITDA margin by segment of 78 million and 13.4% respectively.
Adjusted net adjusted EBITDA margin by segment decreased in the U.S. compared to last year due to lower utilization in the energy sector and the integration of ecology environments operation.
Which has the highest structural cost base than WSP legacy U.S. operations.
America's backlog grew organically by 0.8% compared to Q4, 2020, and 2.6% compare to Q1 19, mainly a true attributable to the U.S.
Our EMEA reportable segments posted organic growth in net revenues of 0.6% for the first quarter of 2020.
Given the realities phase by operations during the quarter UK achieve good organic growth of 3.4%.
Net revenues in our Nordics operation remain flat due to a slower started a year and Sweden.
The region delivered adjusted EBITDA by segment and adjusted EBITDA margin by segment of 84.8 million and 13.2% respectively.
Lower adjusted EBITDA margin by segment is mainly due to severance in the UK of two point fourmillion as well as lower margins in the Nordics due to the store started the year in Sweden.
Backlog grew organically by 13.5 per cent compared to Q4 19 led by the Middle East Nordics and South Africa.
Lastly, our APAC reportable segment delivered organic growth in net revenues of 3.3% organic growth was led by solid results in Australia, partially offset by contraction in Asia as a result of the kobin 19th and damage.
We typically do not provide more granular granularity on organic growth across our a pack reportable segment.
However, as these are unprecedented times Asia posted negative organic growth in net revenues of 3.6%, whereas trillion using delivered organic growth of 8.5% and 2% in net revenues respectively.
The region delivered adjusted EBITDA by segment and that adjusted EBITDA margin by saying that the 40.3 million and 15% respectively.
Adjusted EBITDA margin by segmenting crews due to a strong performance in Australia, New Zealand, partially upset by the covert 19 Empaque in Asia.
Backlog grew organically by 0.5% for the quarter and by Truteam, 0.2% compared to last year.
I would now like to highlight a few of the major wins during Q1, showcasing a simple over expertise from across the globe.
The first as an example of the revenue synergies, resulting.
From the integration of Lisberger into our U.S. operation.
During Q1 WSP was awarded a five year contract amounting to 100 million dollar U.S. for water from projects and the naval facilities Engineering command northwest area of operation.
Secondly, in Canada, WSP was awarded a tree year assignment to manage to see if Toronto's water main rehabilitation program for a total of approximately 19 million in fees.
This program is one of the largest water main structural lining programs in North America.
We have been managing the program with Toronto since 2015, and this new three year assignment with see WSP continue its collaboration to see through the 2020 construction year.
And soon after the end of Q1, we were pleased to have been awarded a role on the Smart Motorways Alliance, specifically luck to digitally enabled designer, which confirms our position as a trusted delivery partner to high with England.
The value of the alliance is 4.5 billion pounds over 10 years for the six partners. We look forward to working with highways, England and partners over the coming decade.
Collaboratively drive the modernization of the UK motor way network through innovative technology and design contributing to immobile.
And connected UK.
We started the first quarters 2020 would the acquisition of L. T Environmental Inc.
Which not only strengthened our expertise in the environment sector, but also extended our geographic presence in the U.S.
Both identify asterias of growth in our Twentyth 19, 2021 global strategic plan.
I would also like to point out that since we announced our global strategy in January 19.
We've had it.
1470 employees to our environmental platform, representing approximately 16% growth in head count since 2018.
Once again I would like to welcome our new colleagues from Mt LT environmental to the WSP family.
Lastly in February we also demonstrated our commitment to deliver on the sustainability ambitions in a twin you 19 2021 global strategic plan.
WSP became the first professional services firm in the Americas to secure sustainability link turns tore syndicate.
Credit facility.
I would like thank our financial partners, who made this possible.
[noise] London note Alain will now review our financial results in more detail.
Right.
Thank you Alex and good morning, everyone. Let me first cover our revenues and backlog for the first quarter of 2020 revenues and net revenues reached 2.2 billion and 1.7 billion, respectively up 1.7% and 4.7 per cent compared to the same period in 2019, we.
Posted organic growth in net revenue of 1.1%, excluding the impact of having one less billable day in Q1 2020 compared to Q1 2019.
Our performance in Western Canada affected by the depressed oil and gas industry and our performance in Asia affected by coal that 19 organic growth in net revenue would have been in line with our expectations backlog remained strong at 8.5 billion, representing a record high of 11.1 month of rather.
And use our backlog grew organically by 3.7% when compared to Q4 of 19 and 5.3% compared to Q1 of 2019.
Let's move to our profitability.
For the first quarter adjusted EBITDA.
Was 218 million, we're presenting a 12.6% margin.
Adjusted EBITDA is in line with our expectation despite having one less billable day in Q1 2020 compared to Q1 2019, and Severances recorded in the quarter amounting to 6.8 million, resulting from the continuous optimization of our operations in Canada and in the UK and the for.
First quarter of 2020, the corporations net earnings attributable to shareholders.
14.2 million dollar or 13 cents per share compared to 63.6 million dollar or 61 cents per share for the comparable period in 2019.
The decrease of 49.4 million or 48 cents per share as explained by 3 million night them. The two most significant of which being attributable to noncash item caused by the extreme volatility observed in the main market indexes and in foreign exchange rates, resulting from the Cobot 19 and then.
Okay, and not related to the underlying performance of our operation.
The first such item, explaining 20.5 million of the decrease in net earning or 19 cents per share results from the noncash reduction in value of investment securities related to our deferred compensation plan in the U.S. as a reminder, these assets are counted.
For other a fair value each water and the fluctuation of values between quarters affects our results.
Although these assets are for the benefit of participating employees. They remain available to our creditors in case of on solvency and accordingly, we need to account for those noncash increases or decreases values.
As it is required since the adoption of the new IRS standard at the beginning of 2018.
Of interest.
On the U.S. accounting standards or U.S. gap. These fluctuation of values would not affect earnings creating different reality for U.S. based company. These asset at a value of 100 million dollar at the end of the quarter.
The second night time, explaining 20.2 million dollar of the decrease in net earning or 20 cents per share relates to the reduction in value a foreign exchange foreign exchange forward contracts that are open at the end of the quarter.
And to be used to edge future transaction.
Very significant portion of the decline is explained by very sharp changes in currency values observed in the last few weeks of March mostly the U.S. dollar against the Canadian dollar.
The last night time, explaining 6.8 million of the decrease in net earnings or six cents per share relate to higher amortization and depreciation related to recent acquisition.
Adjusted net earnings for the quarter, what 47.5 million or 45 cents per share down 8.9 million or nine cents per share respectively compared to Q1 19, the decreases mostly explained by higher amortization and depreciation related to recent acquisition.
Please note that we have amended though definition of adjusted net earnings effective January 1st 2022 exclude the noncash item just discussed previously affected by marketing currency volatility and not reflective of the corporation underlying operation.
Let's now review a few cash flow metrics for Q1, 2020 cash inflows from operating activities that stood at 3.2 million compared to 27.7 million in 2019.
Our trailing 12 month free cash flow for the quarter.
Came at 409.5 million or 173% of net earning beyond our cash flow conversion target of 100% of that are running.
At 1.3 times, our net debt to adjusted EBITDA ratio remained within our target range of one to two time and at the end of the quarter, We had 1.2 billion of capital resources available.
Our day sales outstanding reach 77 days at the end of Q1 2020, a one day improvement as compared to Q1 2019. This improvement is the results of our team continuous focus on cash collections during the quarter.
Finally, we also declared a dividend of 37.5 cents per share for shareholders on record on record as of March 31st 2020, which was paid on April 15 2020.
With a 34.1% drip participation that net cash outlay for the quarter was 26.2 million.
This concludes my remarks Lx back to you.
Thank you Alain before opening the line two questions I would like to reaffirm our commitment being operationally resilient continue meeting the needs of our clients and communities. During this pandemic.
These are difficult times, which brought extraordinary global economy, it can financial challenges.
We recognize the unprecedent uncertainty we face collectively.
That is due to this reality that we withdrew R 22, when you financial outlook on April 15.
So we continue to stringently, followed the developments across our region. The ultimate than pack of this current environment cannot be predicted with certainty at this time.
And neither tend to following quarters. However, we recognize that our long term investors and financial community you may be looking for some direction on our strategy.
As we all can agree to future cannot be predicted. However, this does not prevented us from developing multiple scenarios.
On this basis Rtms up two objectives for the business as we progress into the year.
The first objective is to preserve preserve and safe guard or balance sheet and cash flow generation significant efforts are dedicated to optimizing are working capital to generate free cash in excess of net earnings for the trailing 12 months period ending Q2.
While our ambitions are currently the same for Q3 to four we will reassess the situation as we gain further clarity on market conditions.
Our section objectives equally important relates to our profitability.
It is understood that we continue to rely on market dynamics, but as indicated in the past, we have Nigel and flexible operating model with a large portion of our cost being variable.
Such we have said the ambitions to adjust our cost structure to maintain into 220 20, a similar adjusted humid emit EBITDA margin I'm, sorry profile asked you to 19 executing any nonrecurring expenses related to the adjustment to our cost structures.
As with our first objective we are currently aiming for the same ambition for two three and for Q4, and we'll reassess the situation in light of future developments.
Moreover, we are pleased to report that as of this morning, our results for April although not without challenges are better than we had expected going into the month.
As previously announced we have pro actively implementing measures to adjust their cost structures.
And have postponed all non essential capital expenditures and will continue to consider additional measures as the situation evolves.
As I mentioned as of March 28, 2020, WSP at $1.2 billion available short term capital resources and the low leverage position with a net debt to adjusted EBITDA ratio of 1.3 times.
Furthermore, since early March we remain cautiously optimistic on the back of the improvement in operation in Hong Kong and mainland China as governments around the world begin gradually reopening businesses, we will monitor market dynamics and leverage best practices from our Asian operation as we work.
Through regional plans to Riocan by our offices.
As the full impact of this pandemic remains unknown, we do not believe that our diversified business model.
From both the geographic and sector standpoint.
Our solid balance sheet and regionally empowered leadership model should place us in a solid position to phase discontinuous challenges.
Don.
I should have said, we do believe that our diversified business model.
As a final final note, even though some of our ambitions under our 2019 2021 global strategic plan may be impacted it remains premature to reassess these ambitions at this time.
However.
Regardless of our global of global market dynamics, the underlying principles of the strategy remain very relevant.
First our clients remain at the center of everything that we do second we will strive to provide an environment where people can deliver on their full potential.
Third our aim remains to be a top tier player in every sector in which we operate as the partner of choice for clients.
And finally.
We will continue to build upon our diversified and resilient platforms, regardless of the current environment.
All in view of becoming to Premier consultants in this industry.
I would now like to open the lines for questions. Thank you.
Thank you add the fine if you like that's the question press Star one on the telephone keypad two wed try a question PRASA County, please hold while the compiled the question.
Your first question comes on line of monotonous year, but Laurentian Bank. Please go ahead.
Good morning, and thank you for taking my question.
I don't Wanna, Hi, So firstly you had mentioned in your prepared remarks that Q1 was impacted by Western Canada and energy related weakness unaware of Leerink coal based on today for Canada, I'm, just wondering if that greater risk than other geographies.
Typically given it had the lowest percentage of public market exposure at 34% would there be any correlation there.
[noise] look well not yes, I think right now when we are running multiple scenarios clearly some countries will be impacted more than others in our views.
And clearly.
As far as I'm concerned to be totally transpire parent I believe given our private sector public sector mix.
And also the slowdown that we had seen.
Out west, whether we like it or not there is a slowdown in half of the country.
I believed that the you know China among all of our major hubs could be the won the of perhaps the most impacted by by by all of this at this point in time.
Okay perfect. Thank you you guys are not giving outlook on each individual geographic area. Yeah, correct no no [laughter] I just thought I would try I'm. Just wondering also you could speak about ooh, yeah, because just looking at the corner organic.
Growth was <unk>, 0.6%, but then if I'm looking at that backlog composition I'm seeing that EMEA had the strongest sequential increase at 13.8, 0.5% and really drove the sequential increase an overall backlog.
Yes, that's true I think right now our immune segment reportable segment.
As grown the strongly over the last quarter and the year over year.
But but just let me remind you just going back to Canada, Canada also experienced year over year very strong growth that 8%. So.
And just going back to Canada for a second Mona.
Yes, we mentioned that the you know clearly transportation out west with a couple of delayed bid which impacted.
Our performance southwest and transportation and then if you include.
Oil and gas sum up the upstream work and also dramatic but if you exclude all of this.
Canada or on the east, but also generally speaking experience you know very very solid growth. So so our environmental sector has grown double digit are or if you exclude again oil and gas and you look at our power sector. This was also double digit growth our infrastructure business sector grew 5%.
In the quarter. So so not all is negative and also wise, although I said that perhaps of all of our major hubs right now.
Given what's happening I mean, there is that an impact on the resource sector, but also which will have indirect came back on on other end markets and the economy globally for the Canadian economy, but also then you you ought to discover 19, I said that perhaps this will be one.
Of the most impacted at this point in time, that's what we believe.
Nevertheless, the growth excluding all of this would have been north of 4% for the quarter. So so it was strong and the backlog.
This year is in a much better play than we were a year ago. So I just wanted to a two to two to make sure that I was.
I was making it a shoe of those the specification.
No that's very helpful and appreciate it.
And just lastly from me clean out the Q, it's long on earnings call globally management team, they're speaking about how cold it may change their operations in industry going forward if at all even at the economy bumping up I'm. Just wondering if you could share your perspective, Marty on how cold it may impact WSP and the related and okay.
Look I mentioned that the dream I address in two different occasion.
WSP came in into this a global crisis in a very strong position.
We entered 2020 feeling very good about the you're feeling very good about our backlog.
Very good about her expertise and how we win in the marketplace and I believe than when this is all over we will be coming out of this and then equally if not stronger position.
We need to take this opportunity.
Two.
To continue to transform W. speech professionalized affirm to take this as an opportunity.
As I said to strengthen the organization.
To make it more resilient to make it more diversified and I see always a lot of opportunities in prices to improve as an organization and that's where we're doing right now were challenging or people to do better answer to lead this new environment.
Providing us a lot of comfort on the digitalization strategy that we have on their services.
Acknowledge investment that we've made in recent years and how are people are able to collaborate even though they all do not sitting in a one in front of of each other so I think this has been a great opportunity to test the resiliency of our platform to death.
You know our collaborative tools and how powerful they are and also.
More control batteries significantly more control on on on our margins and that's why even though nobody has a crystal ball and nobody is in the position to provide you with the full blown outlook for the remainder of the year I I told you realize how difficult. It is for you and the investment you maybe.
Look at the W.S.P. book of business now that we've remove our outlook and say, okay. What's gonna happen next and that's why I felt compelled.
Where possible to provide you with as much guidance as to what our plans are you know you know these our ambitions use our objectives and and that's what we have set for the business. We said look whether it's a good marquette or bad Marquette, we have that to control on our costs structure, we have an agile.
Workforce, and we need to control our margin as much as possible and these are the two objectives that we'd set the margin to cash flow generation.
Okay, well I thought I'd try alternate over there.
<unk>.
Yeah next question on phone line of talk talk I'm fine with the I.B.C. Please go ahead.
Hi, Good morning. This is a long for Jacob.
Although a row.
Oh Nice meeting you.
Likewise.
So so maybe just on backlog so strong organic backlog growth in Q1, but but post Q1 are you seeing any major cancellations of previous project towards.
Look again this is extremely difficult to read what our clients are <unk>.
Read their mind.
Having said all that what I can tell you. This as of this morning globally right now we have seen very shoe project cancellation.
I I can only I can only give you an answer based on facts and I don't want to get into the business of trying to extrapolate what may or may not happen in the future, but there's one thing I can give you comfort on his so far on a daily basis globally, we are monitoring.
Project delays and cancellations and so far given that most of our services around the world are considered essential services. We have seen we have not seen I'm sorry. Many project installations at this time, but doesn't mean, it's not going to happen, but right. Now this has not been the case.
Okay.
And yes, so at 77 days four Q1, but.
Post Q1.
Have you seen any issues.
When it comes to the collection of receivables.
No. The month of April so far has been has been a pet as good as it could've been but you need to recall.
That typically to one and two two are slower cash collection quarters and then they typically are in the second half of the of the year.
So so all else being equal.
April as not been any difference this quarter than it was last year.
But really it's slower typically than what you would expect or come to expect in the second half of and you'd given year.
Gotcha.
Okay and.
With with about a or close to 60% government sector exposure as we pass the pandemic you any just comment on.
Potential global infrastructure stimulus opportunity for W.S.B., and and how long could this take benefit W.C. in your view.
Well look.
Globally, we <unk>, we are well position as a trusted adviser to work with governments to work on on on on the best way too you know reopen the economy's from an infrastructure point of view, we've been working with the Canadian <unk>, especially in Canada, then the west.
Also in Europe, and you can elsewhere with governments trying to understand what we'd be the best way.
To reinvest infrastructure stimulate the economy, and and clearly I believe that than the longer term W.S.P. will be Unix you position to benefit from potential stimulus in various countries.
Given our exposure upstream you know India on the advice advisory side, but also and the detailed design side I believe W.S.B. is is uniquely hmm present, you know in all of them the area of the value chain from from you know permitting all the way.
Down to detail design, and transportation and the building sector, and and and the environmental sector to water sector. So so I do feel the power. So I do feel that if governments.
Or should government decide to massively invest a infrastructure I think there'll be as people will be well position.
Okay.
Thank you.
Thank you.
[noise]. Yeah next question comes on its head to head back that went from Indiana. Please go ahead.
I think you are in the morning.
My Little hut.
Oh well unsafe.
Yeah, I like she mentioned being happy with the way business held up in April are there any particular regions are markets a surprise you either on the outside or the downtime.
Right right now I mean, it clearly if if you look globally businesses that I've been somewhat.
Isolated unprotected from from the pen dynamic if I can use such an x. you know such a.
Expression I I think Asia Pacific So far has been doing extremely well and continue to to drive the business very well.
You know Australia is doing extremely well.
I am also very please with the way I think our business into U.S. has been how resilient the business has been.
The first four months of this year and I should also add them I think we should I should command our team in Asia.
Who has I've gone truly old old cycle from being logged on to reopen to bring back all of our Indian people in in offices and with the exception of Singapore. It at this somewhat backing to lock down now.
You know they've done tremendously well two whole margin and work extremely hall hard to hold the margin. Despite a reduction 3.6% organic growth in the first quarter. So so I must admit that and then I could add you know the U.K. business. Despite an election on December 12th they ring on.
Search engine all of 19.
<unk> announcement at the end of January the degenerate, 2.4% of organic growth. So so I'd say that for the most part that this is you know I take all of our our region should be commended on the downside I mean for two years in a row now Sweden had a slew starts in a year.
Not because the economy is not resilient and the economy is not doing well that's just the way it has been over the last two years, but you look at the trans last year of Sweden.
They they've they've had a very good second half so.
So so clearly I wish we had had they had better stars and Sweden.
I wish that you know we were a full steam ahead on on the transportation <unk> large assignment across Canada.
And it seems to be taking a bit of time for for for this to start but for the for the most part I would say on balance that this was.
Order for for WSB.
Okay. Thanks for that come to appreciate things are quite would still but how is Alex feeling about the environment today.
[noise] look I mentioned this in in my address I think it would be way too premature to think about changing are 2000 18021.
That was in 19, I'm, sorry, <unk>, sorry strategic plan at this point in time, Fred and I think that's booked our investors would want us to do we want to dedicate an I am dedicating 150 per cent of my time.
To making sure that we come out.
To spend dynamic in the stronger position of the Internet.
So we are challenging our operation to rethink the way we are doing business.
Yeah, we are making sure not to we're close to our clients and we are we're dare to his sister clients in the best to the best of our <unk> capacity and capabilities and Frank Cure a clients are calling us.
To talk more about business continue with you over the last quarter Lindy, they called us about delaying projects.
And that's a great statement of of our of the <unk> resiliency of of our company and.
And and and and to answer your question along along answer to a short question look like now I'm not sure that it would be a good use of my time and the boards time to talk about that deploying capital outside of W.S.B. I mentioned earlier on that into one but also.
Two I have set two objectives with the organization wanting us to safeguard the balance shifted company.
And also to protect our cash flow and secondly is to hold our margin to the best of our capacity.
And I think these are the right. Prior these for US right now at this point in time, but that doesn't mean that when we come out of this if we are in a very strong position that we will not be in a position to be very opportunistic.
I take valuation is taking a beaten in some.
Some of our peer group and clearly also in the private sector, but in a private sector I'm, sorry, but privately held companies clearly may may not come out of this have you know in a stronger position that Wendy entered.
And perhaps this would bring it snowed of opportunities for for us in the future, but I think.
We need to be patient.
Awesome. Thanks for your thoughts.
Thank you for it.
Yeah next class sounds on line of Max and set set some national back. Please go home.
Hi been running gentlemen.
Hello, and in the morning Max.
Alex maybe just a question.
Getting quite a bit right now around a U.S., a local and state [noise] tax receipts and obviously there was you know automatic stabilisers cares out from things like that just wondering how how you guys thinking about you know governs abilities right now, especially U.S. to to to pay for infrastructure in the short term medium term if you don't mind.
Yeah.
Look Max.
I believe and this is a personal opinion.
I believe the U.S. is probably one of.
You know the best position country to face to spend demick.
Both from a fiscal point of view.
From if financial point of view, but but generally speaking.
Yeah, so much just cool flexibility into system. Unlike many other countries around the world that that I I actually believe.
That if you ask my personal opinion.
The U.S., we'd be in a very good position.
To take calling this challenge and come out from the other side of this and a good place so a longer term I I'm not suggesting they won't be any hiccups in the peaks and valleys, but <unk> actually I believe in the longer term I think and especially at that there is consensus.
Between the Democratic and Republican Party.
Democrat Party I'm, sorry that there's consensus about infrastructure investment that I actually believe and and a long term prospects.
<unk> business in the U.S.
You know we agree and then maybe just one one quick one in terms of how you guys thinking about Asia Pacific I, given the fact that obviously that part of the world's was impacted by the pandemic earlier and you still seem to be generating a positive momentum I mean is it conceivable that we're going to see that that trajectory continuing.
And we'd still be moderating kind of expectations and in in the short term.
And when you say just I just want to be a crystal clear on your question. When you said Asia Pacific Human Australia, New Zealand you men.
Mainland China is your desk untrue already you know a full yeah, I mean, I I guess, the I mean, maybe do you mind, maybe starting with China and Hong Kong and then maybe one shift fairly New Zealand. So it just won't get the timing right for that part of the world.
Yeah, well clearly in in in mainland, China, and Hong Kong I've been very impressed with the way you know the the business has been behaving as I said before we are very dependent on market dynamics. So if there's no work clearly are top line will go down.
But then the quarter and in the month of April we've seen or team you know <unk> working extremely hard.
To to hold the margin and and that's you know.
Lead the marching order for everyone around the world.
And then when you go down and and to be seen I mean, clearly we've seen the biggest drop in the G.D.P. growth in mainland China in recent years. So so we'll see what what happens, but but the level of proposal activity in mainland China actually is very good.
I should say.
And then moving down to Australia, New Zealand I mean.
The state of use out 12, and Victoria been quite so cold and these are just too well just state in Australia, I've been quite vocal about massive investments in infrastructure to stimulate the economy.
And I actually believe that their plan is very sound and as I said before T.W. <unk> very well position with those two states take advantage of that.
That's why you seem to kind of grown that you've seen.
And the first quarter.
Right.
Maybe <unk> last one anything in relation to FEMA, Alex that you you have the ability to share with us or it's still early days when I find it. It is early days Max we've we've we've generated less than 10 million dollar and she's and and <unk> into one so so I think it's early days.
But W.S.P.N.R. brand in the U.S., we're now that's probably one if not the.
Disaster recovery expert so we've done a a lot of work during hurricane season, and that we've done a lot of work.
With Puerto Rico, if you recall and the power side with our who was Burgess acquisition. So so if there is some work and we can act as an expert and again. This is the government I think W.S. people to be this is there to help and we'll be ready to go.
Okay excellent that's it for me. Thank you very much. Thank you.
[noise] Oh, Danny like ask the question <unk> on the telephone coupon. Yeah. Next question comes on line of going to achieve a terrible. Please go ahead.
Hi, Thanks, Applet, taking my whole and I hope you'll thing say some helps at W. a speed.
Good morning Demetri.
Good morning, It seems that just thousandth 19 acquisitions, one not agreed to adjusted net earnings <unk> I Wonder why is that <unk>.
Well, we took with these shows up causing that.
Yeah, but first that's not true I think we were impacted by one less the liberal day and a quarter. If you had one one billables into quarter, we we've added approximately 1.5% of organic growth.
Globally, so instead of being at 1.1, we'd be north of 2.5.
If you I'd you know <unk> and this is straight bottom line profitability that we're losing we have to same viable costs <unk> fixed costs.
For it for the quarter, but then you know we have one less billables day <unk>. So so clearly this was this had an impact on our EBITDDA definitely in our top line also I I take the the great contribution on the early contribution of those acquisition.
Has been affected by Asia contraction.
Has been set up as I said before by our Western Canadian performance, India oil and gas traumatic and resource sector and Unfortunately, that's why you are not in a position to see the benefits.
All of those acquisitions and the quarter, but you're seeing the impact of the depreciation the acquisition below d. admit that line.
So adjusted earnings declined I think index place and primarily because I would appreciate sound I'm more sufficient related caught with listen and that's why it causes southern press on that perhaps reason I guess thousand 19 talking acquisitions are not a creek <unk>.
<unk>.
Yeah I mean.
Yes, the answer is absolutely, yes, because as I said before you're not seeing the benefit of the contribution of our acquisition given that we've had some setbacks and I've I forgot to omitted to mention to severance as a 6 million and a quarter.
100, and also had also an impact.
On on on <unk>, but yet we had to record the depreciation I'm more time position below below or you bit done about G.P.S.. Obviously, so this is obviously, having an impact but I would sit at the main impact.
On R.A.P.S. has been to to just think items that that Ali mention.
Two a should recall I I should as a frenzy reminded our noncash items unrealized losses.
On on that differ compensatory compensation plan, the west and secondly on open an open.
Edge contract that that we have on the balance sheet.
So in the normal case.
But the talking acquisitions that were made in 19 to be a creative options it per se workstation.
Absolutely.
And then yes, absolutely, it's it's very fair and so far I mean, you need to remember that many of those acquisitions flows very late in the year.
Close L.P. or in January 1st we close you need late and in in the second half of stuff, which was the largest acquisition.
So we need a bit assigned to integrate them, we need a bit a fine to make sure that we are getting them into into the system and adjust the cost base of those acquisitions. These are these are not good. This is not going to happen in 60 days as you can imagine, but so far with tell.
You that I'm extremely pleased with the way are regions in the businesses have been been been reacting.
Yes, I I'm very confident that those acquisitions will be a creative two WSB both from an expertise point of view, but also from a financial point of view.
Yeah, I think without helps and that tend to talk a little bit more about <unk>.
<unk> significant challenges in terms of but growing back Hulk as a result of shutdowns them you know <unk> dot work from home.
That's up for this week so.
Well, what I'm going to tell you I believe is true for everybody working in the space.
As a professional services from clearly on the advisory side to planning side. If you cannot you know if people aren't locked down and and you environmental side people are not allowed to access sites and I have to work remotely.
Clearly some some of our markets, where burning a bit more of our backlogged then we would otherwise surely because this is a very high season typically the spring.
In North America for for for this sector, but I am confident as we are reopening for businesses that you know, we will be able to to catch up on this and I and I mention for instance that in Canada, our environmental sector North of 10 per cent in the quarter. So some quite pleased about that.
Having said all that on on everything else I, I, saying that I haven't seen so far you know a reduction necessarily on proposal activity.
Contrary I think this year has been good so far and I can only based it's all based on facts and and and what we're seeing in the marketplace, but I wouldn't use this as a a predictor of a future events. Obviously, we don't know what we don't know yep just yet.
I see a thank you and all the April results, yeah, what's to be able to comment on what U.R.C. on not adjusted earnings over your you didn't mention that with all to better than expected like a little unclear what else that me and four or Guy Negro seven.
And and what does that mean for adjuster or things, so just a little bit more specific if possible.
Well, but the reality is on on currency now the market that's subtle little bit. So so I think definitely <unk> bye bye.
<unk>, we are in a much better plays and we were in the in the month of March for instance.
But clearly the the comment I made.
Earlier on was in relation to the underlying performance of our business and not so much about items that we are not is beyond our control I'd say that you know right now based on the expedition that we have for the month of April we are pleased with what we have seen so far.
And we're feeling better about the Monday April now than we were when we entered.
Is that assigned Dot May June July August and September will be good that I cannot predict.
Okay. Thank you.
Thank you.
Yeah next question got some on tend to have <unk> <unk>. Please go ahead.
I I <unk> <unk> aligned maybe the last one for you you incurred and honor realize loss on a effects instruments that flowed through the interests expense line I was Ah clearly.
Labeled and quantified, but you also pointed to a hedge.
Negatively impacted the Americans have a document can provide a bit more color on that second expands and whether it had them into impact on the result.
Yeah, and and the the reality that we've experience with the pure and C.U.S. The cab, obviously, you've seen the large fluctuation towards the end of the of of a month of March. So the the range is is is about 2.5 million dollar.
And it's I would say that not 90 plus percent thought amount was a was in the latest part of the of the month.
And it's a as you said, it's all it told realized.
On on on closed edging position.
<unk>, what's in the financing a expenses is open edging position that we ask for future future transaction on 2020 and 2021.
Okay, alright, thanks for that.
<unk>.
Thanks.
And then next question comes on line of South <unk>, but this out there you go ahead.
Yes, thank you very much and good morning gentleman.
<unk>.
Oh, I think I just wanted to get your thoughts on the no that the vast majority queue for your employees or.
Working remote thing I was wondering if you the where are you in the future there would be an important t. to maybe increase the number of employees that work for a moment.
May be reduced yet.
Yeah <unk> the residential costs that you have in for the business.
<unk> of course I mean, it's it's we are working with with architects right now we are working which landlords from around the world developed some top leadership.
And and and and taught leadership at views on on what life me It looked like a in the workplace the workplace with the future.
We are actively working with this with our clients in the private sector in the building sector.
The answer is it will change how this will change and how it will change I mean, we need to remember that we won't only been into this for six seven weeks now so it's early days and there's a level of the excitement about about this right now.
And I can only totally understand it but went to be precise and to be tried to B.S. transparent as I can in in answering your question, yes, Indeed, I I believe that with the continued <unk> of our services.
And a collaboration tools that we are developing.
I am confident in the years to come that you know our work will be we will be able to doing work from from pretty much everywhere around the world do I believe that and person and traction will still be cheap actually believed that we're we are human being.
And a human interaction is is essential we're not man to be working by ourselves at home and and not be able to socialize with coworkers and socialize with clients and develop businesses. So so I I actually believe that they will be a mixture of all of the above and.
Actually believes that we we need to see the positive and all this and we need to see the opportunity of of becoming a better from as a result of this crisis and I'm confident that we have the people to to orchestrate that had to transform the organization, but yes, indeed I.
<unk> believes that this will change the way we are working <unk>.
The extent of it that allow me a bit more time, but that one day I'll be able to answer that question.
Yeah, that's great color. Thank you very much in the Stacey.
Thank you.
There are no for that question at this time I will tend to call back over to their presenters that closing remarks.
Thank you so much for attending this call I realized that these are.
You know on suffering time.
You try to provide you with as much color as we could with what we know today and I look forward to updating you and a month and quarters to come. So thank you very much in on it forward through talking to you in the near future. Thank you.
Thanks, everyone.
That's cool that's conference call you know this.
Yeah.
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