Q4 2020 WSP Global Inc Earnings Call
[music].
So as you won't be finished here good morning, ladies and gentlemen, if you have that COVID-19 on silly for Nexgen Davies adjusted Nancy.
For the empty mass is there.
Yes, just give me one day or debris the S P.
Welcome to Ws piece fourth quarter and fiscal 'twenty 'twenty results conference call I would like to now turn the meeting over to Quintin Weber adviser Investor Relations and we'll let Pat answer. Please go ahead Mr. Weber.
Good morning, we hope that you're all safe and doing well thank.
Thank you for taking the time to join the call during which we will be discussing our Q4 and fiscal 'twenty 'twenty performance our outlook for 2021, followed by a Q&A session.
It is today are unacceptable for our President and Chief Executive Officer, and now let me show our Chief Financial Officer. Please note that this call is also accessible on our website the P O webcast.
During the call, we will 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 are listed in our most recent management discussion and analysis also during the call. We may refer to certain non <unk> measures. These measures are defined in our management discussion.
And analysis for the year ended December 31st 2020, which can be found on SEDAR and on our website.
Our MD&A also includes reconciliations of non iff's measures for the most directly comparable <unk> measures.
Management believes that these non <unk> measures provide useful information to investors regarding the operations financial condition and results of operation as they provide additional key metrics of its performance. These non <unk> measures are not recognized on the right for us do not have any standardized meaning prescribed on the idea for us and may differ from similarly named <unk>.
As reported by other issuers and accordingly may not day count Purple. These.
These measures should not be viewed as a substitute for the related information prepared in accordance with IRS with that I will now turn the call over to Mike <unk>.
Thank you Quintin and good morning, everyone.
We first start by saying that despite unprecedented circumstances I am really proud of our accomplishments in 2020, thanks to the dedication and resilience of our teams we demonstrated our ability to rise to the challenge.
The agility of our platform and the strength of our foundation above all.
We ensured the safety of our employees, while staying focused on our strategic objectives.
Looking back at the last 12 months results.
We are reporting solid year end results that are in line with our expectations, we maintain good margins and a healthy backlog and safeguarded our financial position.
We also delivered above expectations in term of adjusted EBITDA, adjusted EBITDA margin and DSO.
Our ability to stay focused on our strategic objectives also have materialized at the end of the year with the announcement of WSB agreement to acquire golder.
A global leader in Earth Sciences, and environmental services with approximately 7000 people together, we are creating the leading global environmental consulting firm with approximately 14000 of our 54000 professionals, which will be dedicated to accelerating the world screen transition.
In connection with the equity financing of the Golar acquisition, we establish long term relationships with new strategic investors being GIC, one of the world's largest sovereign wealth funds and British Columbia Investment Management Corporation, one of Canada's largest institutional investor.
As we are expecting the transaction to close in the first half of Q2. Our current focus is planning for a successful integration across functions and regions and the smooth transitions for Goldberg people as they join the WSB family.
Our combined strength will uniquely position us on the rapidly growing ESG trends driving demand.
For environmental services and.
Bold infrastructure development, and we are eager to start winning projects and working together.
Additionally, on the M&A front, we recently announced true strategic acquisition totaling approximately 500 people.
And new client relationships.
<unk>, leading positions and then increase geographic footprint in the United States.
First we acquired kw mission critical engineering, which expands our complex building sector capabilities in the high growth data Center, and then share in science technology markets in the United States, while also significantly increasing our presence on the west coast and providing a platform <unk>.
And our data center capabilities in Europe, and in Asia with our global clients.
We also acquired Teekay one.
A mechanical electrical engineering firm based in Irvine, California, which reinforce our U S property and building business in the healthcare science and technology markets.
Finally, this week, we just announced the acquisition of FERC Con, which strengthen our capabilities in strategic environmental engineering and consulting services, while further expanding our geographic presence.
And southern and eastern United States.
M&A is an integrated part of our strategy and so is our commitment to ESG.
For example at the beginning of the year there'll just be became the first professional services firm in the Americas to secure sustainability sustainability linked terms for its syndicated credit facility.
This year, we will be disclosing data using guidance from the task force on climate related financial disclosures or <unk> and the framework issued by the sustainability accounting standards board or SaaS B.
And we are planning to update our climate ambitions to align with current science as we recently committed to align.
Our future ambitions with science based target initiative or <unk>.
We look forward to providing more details on our progress later in 2021.
I would now like to highlight a few of the major wins during Q4 showcasing as simple of our expertise from across the globe the globe.
Starting with a key win in the U S. I am trilled to share that we were just awarded a significant multiyear program management services contract with the U S. Postal service building on a 30 year establish business relationship our team of seasoned professionals will support USPS and their strategy.
<unk>, which includes a focus on the retail of the future as well as a variety of services to their delivery platform and systems across USPS 32000 facilities nationwide to enhance the efficiency of the operation at the Endo close to half.
Of the worlds mail volume.
Moving on to Canada.
At our Q3 2017 results presentation I announced we had won the central block rehabilitation project.
And I'm delighted today to announce the extension of this significant contract.
This is not only our largest project in Canada, but also our largest buildings project in our portfolio.
We expect our involvement will likely continue until at least 2028.
Under this agreement we have the responsibility to rehabilitate and extend the most recognized and valued building in Canada Center block the home of Parliament and assemble of Canadian democracy.
In addition to providing building engineering design services, a considerable part of our work relates to Earth and environmental science.
<unk>, including archaeology designated substantive geotechnical and sustainability.
As a flagship project for the government of Canada. This project offers a unique opportunity to update and improve the sustainable performance of one of the most culturally significant site in Canada.
Shaping one of the most <unk>.
Recognize the bolt and symbolic Canadian buildings, the project will demonstrate leadership and alignment with the governments priority for low carbon and enhance sustainable performance.
Moving on the highly.
Growing mission critical market.
We grew our pipeline with many many data center projects wins during Q4, 2020, and Norway, France, Switzerland, Hong Kong, and Taiwan, demonstrating yet again, our global reach.
Pandemic has accelerated a boom and the creation of new data center facilities to cope with the rising demand from online shopping.
So working online education and online events among other things.
Latest forecast from research and markets predict a global data center construction will grow from 27 billion Canadian in 2020.
$236 billion Canadian by 2027.
With the recently announced acquisition of K W Mission critical engineering.
<unk> uniquely place and positioned to further take advantage of this rapidly growing market.
Combining kw expertise with WSB global footprint means we can now offer best in class mission critical services to our clients throughout the U S and worldwide.
We now have Inc.
Treat centers of expertise in the U S U K Hong Kong, having the ability to serve this market for <unk>.
Wide.
We are all we are already seeing revenue synergies from kw in respect of their U S clients investing in Europe, and true increased capacity to lead the largest mission critical facility projects for cloud service providers.
In summary.
I am very pleased with the way we finished the year.
In addition, we see many opportunities in 2020 by completing tree key I'm, sorry strategic acquisitions.
Expanding our exposure to promising markets and securing exciting projects.
I will now review our financial results in more details and discuss our 2021 outlook.
Over to you.
Thanks, Alex for the quarter revenues and net revenue reached $2 2 billion dollar and $1 7 billion up 1% and downs for 1%, respectively compared to Q4 2019 organically net revenues contracted five 9% for the quarter the increase in them.
In the Americas steaming from organic growth and acquisition growth was offset by organic contraction in the other reportable segment.
Revenues and net revenues for the year reached $8 8 billion and $6 9 billion down one, 3% and 4% respectively compared to 2019 organically net revenues contracted three 6% for the year in line with our expectation.
Let's move on to profitability for the fourth quarter, adjusted EBITDA reached $262 million.
Representing an adjusted EBITDA margin of 15, 5% compared to 15, 1% in Q4 2019.
The increase in margin is attributable to the Americas, APAC and Canada reportable segment, partially offset by lower margin in India.
For the full year, adjusted EBITDA reach $1.054 billion up $16 9 million or one 6% compared to $1 $37 million in 2019, adjusted EBIT, thus slightly surpassed our expectation.
Claude as of December 31, 2020 stood at $8 4 billion, representing 11 five months of revenue. We're glad to report that our backlog grew organically in each of our reportable segment in 2020, representing an overall organic growth of two 4%.
Adjusted net earnings stood at 81 million or <unk> 71 per share in the fourth quarter of 2020 compared to 55 million or <unk> 52 per share in Q4 2019 day increase in these metrics are mainly attributable to the fact that in 2019 for write offs of leasehold improvements.
What's taken following the renovation of our New York Office adjusted.
Adjusted net earnings stood at $339 million or $3 eight per share for the year ended December 31, 2020, compared to $306 million or $2 91 per share for the corresponding period in 2019. The increase in these metrics is attributable to higher a bit.
<unk> contribution and lower interest expense due to lower long term debt.
I will now review a few cash flow metrics for the year cash inflows from operating activities stood at $1 1 billion compared to $814 million in 2019, our free cash flow for the year came in at $735 million a record high of 266.
6% of our net earnings well beyond our cash flow conversion target of 100%.
Our days sales outstanding reached 63 days at the end of 2020, and 11 day improvement as compared to 2019. This improvement is mainly the result of our team's continued focus on cash collection.
Lastly, our net debt to adjusted EBITDA ratio stands at 0.1 significantly lower than the $1 one.
As of December 31, 2019, due mainly to the repayment of a portion of our debt following strong free cash flow generated in 2020.
And the equity financing completed during the second quarter the.
Our net debt to adjusted EBITDA ratio is expected to increase to approximately $1 three following the closing of the Goldman transaction.
During the quarter, we also declared dividends of 33.
<unk> 37, five cents per share for shareholders on record as of December 31, 2020, which was paid on January 15, 2021, with a $54, 1% drip participation. The net cash outlay was $19 5 million and.
In conclusion, we delivered on all of our 2020 financial outlook metrics issued in Q2 2020.
I will now comment on the 2021 financial outlook, but before I do so I'd like to remind you that the outlook for our anticipated 2021 performance is aimed at assisting analysts and shareholders and refining their perspective on our performance. It has been prepared based on foreign exchange rates effective February 20 for it.
'twenty one.
So please do bear in mind that we have not considered any acquisition disposal or any other transaction that may occur after todays date, except for the Golar transaction.
We anticipate net revenues to be in the seven $5 billion to $8 billion range and to post organic growth in net revenues in the 2% to 5% range. We expect a different seasonality pattern in 2021, as we ramp up our workforce to adapt to gradually increasing demand into the second.
Half of the year, we therefore anticipate low to mid single digit contraction in our net revenue for first quarter and sequential increases quarter over quarter for the rest of the year.
Adjusted EBITDA is expected to range between one point to two and $1 $2 9 billion.
Also anticipate our quality our quarterly adjusted EBITDA to range between 18% in 2009% of the total annual adjusted EBITDA with Q1 being the.
For the lowest excuse me in Q3 the highest.
Turning to tax we expect our tax effective rate for fiscal 2021 to be in the range of 26% to 30% and we anticipate net capital expenditures to range between $150 million to $170 million cash.
Opex, mainly pertains to property and equipment and intangible assets net of proceeds from disposal inlet and lease incentives received.
Turning to debt our corporation will continue to manage its capital structure to target a net debt to adjusted EBITDA ratio between one and two.
Lastly, we anticipate between 55 and $65 million in acquisition integration and restructuring costs and we also anticipate that head office costs will range between 90 and $100 million in 2021.
By Reportable segment, we anticipate mid single digit organic growth in net revenues for Canada in the Americas and low to mid single digit organic growth for <unk> and <unk>.
APAC this.
This concludes my remark on that back to you Alex.
Thank you Elaine and before opening the line for questions I would like to thank our employees across the globe and our board of directors as well as our clients and shareholders for their continued support.
During this unique year.
Looking back at 2020, I am proud of what we accomplish with delivered on our financial objectives.
We announced a highly strategic acquisition opening a world of possibilities and we set the stage for 'twenty 'twenty, one and trained the year with confidence supported by a strong financial position and a very healthy backlog.
And as we start this year of our strategic cycle, we feel confident to meet the ambitions that we had set for ourselves and our 2019 2021 global strategic plan.
As such our solid operating plan.
Combined with the successful closing of the Goldman transaction will position us well to deliver on our ambitions to reach between eight and $9 billion of net revenues and to exceed the high or higher end of our projected EBITDA margin of 16%.
Lastly, we also look forward to developing our 2022 2020 for global strategic plan.
This will be a great opportunity for us to further embrace our ambitions I would now like to open the line for questions.
Gentlemen, good afternoon, and cursed him at peace and implants, and she'd like cleansing tender for Nick but you've got Patheon my math on that for Ya.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound.
Please standby, we compile the Q&A roster.
Your first question comes from the line of Mona and as you hear from Laurentian Bank. Your line is now open.
Good morning, and thank you for taking my question.
When I think about the business Youre diversified strategy has fared well you've had challenges in the past then looking back a number of years ago I remember in Germany performance was lower.
For the country head and second income in there following the focused acquisition and the low oil price environment that follow up that way from right sizing of about five years ago. When I think about 2020, I feel like COVID-19 challenges from macro headwinds seem to flow through to nearly all geographies and income just wondering would that be a fair statement that 2000 total helping your malls.
Challenging period, and then I understand that you took.
With debt.
And right sizing the head count.
Largely in the back half of the year and just wondering your confidence level of that debt taken should only headwind bring improvement from here and thats the prices should be de minimis.
Yeah.
Good morning, Manav. Good question look it's without a doubt.
This is Ben.
Prepared to say its been the most challenging.
But to.
For me high up there in terms of.
Challenging years of course, we started the year with.
Great ambitions and very quickly returning to Q2 revising your ambition and say look we need to maintain our margin profile.
And we need to safeguard our financial position at all cost.
Meanwhile, while we were doing that we said we need to have a longer view on the spend AMIC and we need to take long term measures to safeguard the business and making sure that we delivered a year.
And you will you will recall Mona debt.
At the beginning of the crisis in the middle of the crisis and I just reiterated for the third time now.
I said that.
We were not prepared to revise our ambitions our strategic plan.
My mind.
The underlying principle of the strategic plan and the strategic cycle, we're very relevant with or without the pandemic.
The marching order within the businesses. We can have remained resilient and we are going to deliver on that plan.
And what I said this morning is I feel very confident now.
Assuming that true.
21 is progressing the way we believe it will progress and combine this with the closing of golder debt.
We will not only meet most of if not all of our financial ambitions, but on EBITDA margin will exceed them. So.
Yes, it's been challenging, but what I'm proud of is.
We didn't wait for day events to dictate our action.
I feel that we have dictated actions.
Ahead of what was happening and I feel that the team was very agile.
And very proactive and Thats why we are in the in a very good position and if I could add to that as well that yes.
Uh huh.
We've had relatively low organic growth contraction for the year, but on net revenue combined with acquisition growth. We finished the year flat.
This is a great outcome I belief when you look back over 12 months and on top of it.
Our backlog grew organically in a very very challenging year. So so I look at the year 2020, which was the second year of a three year cycle.
I look at the work that was awarded I look at the way, we reshape the business.
And I look at.
<unk>.
Acquisition that we announced on December 4th, which we haven't benefited from yet.
And I'm, just looking at the future and I have to net than I am cautiously optimistic but also very excited.
That's great. Thank you.
I have one more question given the number of participants on my understand that the Golar acquisition has not yet closed, but when you think about your leverage relative to.
Leverage at year end, and what golder does to the balance sheet, there's significant dry powder available I am just wondering colder days achieved some of the three year strategic plan targets, but I'm wondering about.
Near term larger size acquisition and ultimately do you have any desire to be on another conference call going through.
Another large significant transaction.
Yeah.
Yes.
Look I mean.
You know me and you know WSB of course.
If we can be opportunistic and if I believe we can show gen create shareholder value.
We have this management team doesn't work and and sequence we work in parallel.
So so if there's a way for us to create shareholder value you can rest assured that we'll work towards that goal.
Having said all of that.
We essentially announced this transaction on December four we havent closed the transaction yet and.
And right now what am busy doing is really to engage.
With our people that WSB, but also where possible engage with the people at Goldberg to really.
Make this a real success.
I feel that personally.
I can't vouch for that now even more than this on December 4th.
No.
<unk> of.
Of collaboration that I believe we will have between the true workforce would be.
It would be quite extraordinary Ryan and I actually believe that debt, we will be in a position to create a lot of revenue synergies together. So so I think our focus right now my focus certainly is really to make sure that this integration is a success.
And I want also to make sure that we deliver a good operating year.
And a good operating plan for our shareholders, but as you know those deals don't happen overnight and you need to entertain discussions you need to have informal discussions more formal discussion then.
And as I said to my Board this week.
I cannot take a step.
Step back and wait for a year to entertain discussions again.
I have to keep.
Keep going and if there is a possibility to create value.
Jimmy I think we have now.
The balance sheet to do that.
Yeah.
Leave it to that at the moment.
Yeah.
That's great color I'll leave it there thank you.
Your next question comes from the line of Jacob bout from CIBC. Your line is now open.
Good morning.
Hello Jacob.
Just had a question so on.
On your implied EBITDA margin guidance.
So the number that I'm backing into the midpoint is 16, 2% so.
A meaningful step up from from 2020, and so for Golar does provide a lift but thats pretty much second half you talk about some of the buckets of what else is driving this.
I'd say Jacob we are.
I'm going to start by saying that has nothing to do with the reduced footprint.
Floor footprint.
I just wanted to get this out.
Of the way right away, if we were to reduce our footprint this would be beyond and above what we are we are we are guiding right now.
And might as well addressing debt now before I get the question.
I believe it is premature as.
As far as I'm concerned to announce a.
Whatever percentage of reduce footprint.
I care about our culture I care about our brand.
And I think debt and I care about our young professionals and do you need guidance and leadership.
And in my personal opinion.
Announcing now pandemic not done yet.
A significant reduced.
Our footprint for employees I think it's not my strategy I tend to be controlled in any way.
And a wait and see.
True to determine what's best for employees and our clients before before making a call. So so.
The reason why I believe we've seen.
Strong margin improvement over the last few years Jacob.
We work extremely hard.
And over the last five years, we've worked extremely hard to work on many many levers to increase our margin profile and frankly.
And the last five years, we have increased our margin profile by 20%. This is not de minimis.
Part of our DNA, we've always been like that.
And certainly where we're pushing the hardest right now of course with the exception in addition to cost optimization.
Around our corporate costs, we are making tremendous effort around the digitalization of our services, making tremendous effort.
And having a better project managers, attracting the best talent in the industry to deliver a better project.
Heart of what we do.
As to deliver good project.
At the lowest cost possible.
And certainly if I look at utilization if I look at technology, if I look at project delivery I'd say that that's where we've made most.
Of our effort.
And this certainly paying off.
I certainly have no intention to stop there we're going to continue to work hard to to try to increase our margin profile in the years to come.
So ultimately where do you think you can get.
EBIT margin.
Let's discuss this when we announce our next plan.
Obviously I will take the next few months to work with the team.
Our clients, our investor base actually to determine where we wanted to take the company forward.
But if for your question is do I still see some margin improvement potential the answer is yes.
That's right.
Second question is when we look at.
Net revenue as a percentage of.
Overall revenues.
Dropped in the fourth quarter this year versus fourth quarter last year.
Increased sub consultants typically buried in there.
How should we think about that on a go for basis is this a one off or or whats. Your thought you talk about the organic contraction.
Ill traction about net revenues as a percentage of overall revenue.
Our revenues.
Yeah, Elena you want to take this one up.
Sure.
So youre right in Q4, we see although we see a contraction of our net revenue when you look at it.
When you look at it at the gross revenue level.
It's essentially flat or the less contraction. So there was an increased level of sub consultant use is.
Just a question of mix J carpet.
Nothing much to read into this.
The one of the key takeaway is that when you look at the portfolio of project, we manage in the volume of work that we generate looking at it.
The growth level.
We've seen a good level of work and I think from Q4, where.
We're pleased where we ended the year end.
<unk>.
It's a variety of reasons on specific project. It comes mostly from the U S.
But there's nothing specific to read from this from the situation on a go forward basis.
Alright, Thank you very much for a week ago.
Thanks Jacob.
Your next question comes from the line of Yuri Lynk from Canaccord. Your line is now open.
Hey, good morning, guys.
I know you're right.
Good morning.
Good morning, Alex just wondering if you can touch on what Youre seeing from your from your clients in terms of their willingness to move forward with projects.
Specifically in the U S. Maybe on the federal side wondering if the election is.
Caused any pause in the near term and.
Perhaps might lead to a better second half for from other funding measures come through just updated thoughts there.
Yeah.
Yuri I think.
And it's something I have been addressed in my commentary, but certainly if you look at the U K for instance.
The bidding activity has never been.
So good in recent years, we need to remember to UK is coming off a very tough two or three years.
With Brexit elections.
Accruing off of the private sector for two years ago.
I look at January.
For instance, the month of January for Us.
Slightly better than expected across all of our regions.
And.
For the bidding activity is better than what we were all anticipating in the UK for instance, now your question was more directed to the U S.
Just talked about the U S postal office and.
Postal client that we have it's a relationship that we've had for 30 years. This is a.
$500 million to $600 million U S job that we were just awarded.
And that is not included in the Q4 backlog so I don't see any.
Major delays in project.
And ice actually oppose it a positive.
Outlook as it relates to the U S and uncertainty the biting by them.
The election as you can imagine when I can submit we consummated this transaction and work.
To complete this transaction.
We didn't do this with Biogen being elected in mine.
But it's fair to say that if it was a very good timing for us and sometimes you need luck in life and I feel that our investment in west quite timely.
And the timing was quite good so of course I feel good about.
Momentum in North and North America.
So.
Okay. That's helpful.
Maybe just a nitpicky one for you on the on the guidance.
The wage subsidy was a pretty big component in Q4, just wondering what if anything is in your EBITDA guidance on the wage subsidy side.
We don't anticipate anything.
Jacob so those non non in the guidance.
I'm very sorry.
Yeah.
So.
Sorry about that.
Okay.
Okay is that because you don't anticipate getting anything in Q1 or are you just taking a conservative approach.
We don't anticipate there might be small small amount here and there, but there's certainly nothing large that we see the horizon.
Okay, I'll turn it over thanks guys.
Okay.
Your next question comes from the line of Ben <unk> from Deutsche Bank Capital. Your line is now open.
Hi, good morning, everyone and congrats for the strong finish the work for 2020.
Just in terms of M&A, obviously golder provides you a great.
<unk> foothold, but now looking forward are there any geographic areas or expertise you would look at.
In terms of M&A now debt Golder provides you a great foothold on DSG from.
Look Ben what I mean.
If any I think the last four or five acquisitions, we've announced three or four we've announced since December 4th we've added another 500 people.
Uh huh.
And I mentioned it in prior calls.
I think I see the investment community, making I believe.
General statements from the tend to over generalize.
Yeah.
Depending on my personal limping into to Overgeneralize.
The idea that day.
Building sector is going to be a tough sector for for years to come.
If you're smart about it I see incredible opportunities and the building sector and that's why we we are now aggressively growing our mission critical data center expertise and now we have true centres of excellence in the U K.
In the U S and in Hong Kong.
And we are not working.
As a team.
With the largest.
Tech firm in the world without naming names I think you can name the true afford debt I'm thinking about and.
And we work with all of them and we followed them globally.
And and you look at what the.
Work for remote work is done.
And the need for cloud computing and I think we are seeing some opportunities there so.
So truly.
As I said before but why we don't think in sequence, we think in parallel and wallet was very focus.
And creating the leading firm and non <unk> sciences and environmental consulting.
We're not taking a break on other end markets and we're going to continue to capitalize on their strength on those so so clearly.
There is so much room in other ways for us to grow in the U S and Europe.
And even in Asia Pacific So so.
I feel quite good that we will find the right opportunities to continue to strengthen our platform.
Okay, that's great color and to come back on the per control a fortunate coming out from the U S election, I would be curious to get more color about the timing.
Wondering if you have all the capacity to deal with this greater fortunate D or we should expect head count probably to increase them.
In the U S up from one point in time Alex.
Well I think Ben what this should not come as a surprise to our investor base that we.
We expect.
Slower Q1.
With a ramp up in Q2.
Q3, and Q4 for a variety of different reasons right. You know Q1 last year dependent hudnut hip so of course, we are going to be comparing to.
Two to higher standards, but indeed, you are right debt.
I expect a ramp up in head count as we progress.
And the year.
And again to add to the point or question that you just made.
If the question or indirect question was did we.
Include in incorporated.
Central uplift that the bite into election would provide too.
True to the market in our platform the interest no.
Too late in the game for us to incorporate that.
And frankly, I don't tend to take political events.
As upsides you never quite know so we focus on what we control and what we control is the conversion of our backlog and our win rate and I'm very pleased about that so that's essentially what we're going to be doing.
Okay, that's great color and last one for <unk> in terms of net Capex. Obviously, the envelope is the 150 to 170.
And you finished 2020 with the number that was below what was targeted previously. So I was just wondering if you could provide some color on whether there were some catch up versus the amount that was net spend in 2020.
Or is it.
Probably it reflects a portion toward golder and if we can use the 150 to $1 70 as a good base going forward.
Yes Benoit.
It's a good base going forward for sure those theres, a little bit of everything you've said.
The answer is it's catching up on some spending and Golar is included in there as well.
Yes.
That's a good good good way of looking at what to expect next year.
Okay, great. Thank you very much for day time.
Thanks Manuel.
Thank you Bruno.
Your next question comes from the line of Michael to flow from TD Securities. Your line is now open.
Thanks, Good morning, Alex and all day.
Hello, Michael.
Hi.
My first question is about golder and.
You reiterated the timing for expected closing in.
The materials, you've put out its consistent with what true what you originally talked about but I am just wondering if.
There is any update just in terms of.
Status of approvals or any other any other aspects of the transaction as you work toward closing.
And then as a follow on to that.
Wanted to I know you can't formally begin the integration process until the acquisition closes but.
Also hoping to get your thoughts now that you've had a few more months to think about the transaction.
On integration and also Alex you had mentioned.
You're feeling better about cross selling benefits.
Benefits and potential cross selling synergies any any further details on that front.
I'll, let al answer for you know.
The first question around closing and then I can pick up after Michael Yes.
Yeah, So Michael on the regulatory approval on the regulatory approval question things are progressing well no no no red flags and it's.
As expected so we're still expecting to close the transaction in the first half of Q2.
So thats the status its no red flags.
So yes, I think we are working with the deadline, we provided in December and mine them and hopefully by the time, we speak next.
That's true.
Action will be behind us at least the closing of it Michael.
As it relate to integration of course until we're close and we have regulatory approval, we have to be mindful.
Michael.
And from a competitive point of view to true.
Not sure sensitive information. So so you will understand that.
We are both firms are quite careful about that having said all that of course.
We've had.
We've had a number of discussions around operation around leadership.
Brown, you know of course, when you do a due diligence.
You draw overall conclusion on the potential synergistic benefits.
And also the potential duplication on appliance, but once the dust settle and you have the time to breathe a little bit.
Take a closer look of it and frankly I'm quite.
Ex tightened.
The combination of the footprint.
Uh huh.
I look at Canada for instance.
We are we are driving force in the province of Quebec.
They are driving for southwest.
Together in Ontario to combine forces will make us the undisputed number one which I am extremely excited by.
You look at the leadership as well.
The way things are are are essentially folding together.
I'd say that right now for instance on the plan around integration and Canada is essentially very very well advanced.
And this is perhaps the biggest integration we have to do in the group. So I'd say that that as far as I'm concerned essentially derisked.
And in the U S. We're probably.
80% there.
In Australia, which is Max I believe in the next few weeks few weeks that will be in a fairly good place.
Of course in Europe for Goldberg has a smaller sized presence, but I see tremendous opportunities to have a strong team in Sweden. We are one of the largest in Sweden, and they are bringing to the table and incredible.
Mining team in London.
Which will.
We'll tag along very well with our UK business, which is essentially doing nothing around mining so.
So I look at this and I feel that the integration is doing.
Doing well in their day leadership of Panama, and Tom Logan, The Chief operating officer of Goldberg.
And then when I look at.
I've done enough acquisition, Michael to know when.
The.
The recipient of the news are welcoming the news or not then.
I can tell you that there is tremendous excitement on both sides.
Of this transaction.
And I know when you feel it when the employees are definitely looking forward to start engaging with the other side to start working on projects.
I mentioned it in December for it on our analyst calls that.
I think we will be able to bring golder on infrastructure.
Project.
And if you take mining for instance.
Of course Goldberg as the leading firm in undergoing underground design around the world, especially in the mining sector.
But they have very limited capabilities around all of the Capex and the infrastructure outside.
For above ground.
Mining sector and Thats, one of our strength so so.
So if we can access those fortune 500 clients I am confident.
Debt.
Being able to drive a lot of good.
Synergistic benefits.
And on top of it that finish by saying debt.
You never quite know what the clients' reaction will be until you announce right.
And I.
I don't think I can think of one client who said that this was not good news for them I feel that the combination of the two firms together, we'll be able to expand the scope of services that.
That will be able to better serve their clients and our clients. So so look.
These are only words and now we have to deliver for you.
But I think this is a good start.
Okay. That's very helpful. Thank you.
And then just in terms of my second question.
I wanted to ask about.
A question I guess related to the organic growth.
The expectations, you've put out there 5% for 2021 part of that is predicated on your ability to ramp up your head count in certain regions.
Where I guess headcount has come down in certain instances, where you want to ramp that back up to achieve that growth I'm just wondering about.
Your comfort level with your ability to hire and attract employees in the past you've talked about how competitive it is and.
I suspect you feel comfortable with it as you put the guidance out there, but just any thoughts around.
Your ability to attract the talent you need.
Yeah.
Look.
One I'm going to tell you what I told our board this week.
Unlike many unlike years.
On the back of <unk>.
Recessionary period I mean.
I look back at the last 10 12 years since I joined this firm in and.
And this is this is a unique circumstances.
Sense that we saw our backlog growing.
And as I said, you know the central block assignment, which is.
No.
But.
A huge a big project Michael.
And then I take U S postal which is another very very large project that are not even in our backlog.
Q4, and I look at our backlog in a sense that we have the backlog.
To generate that organic growth without a doubt.
And the problem is not the backlog of problems.
Is to convert that backlog and revenue by hiring people.
And given that we have been more than a year at home.
Obviously at hiring.
It's always been.
In the back of my mind.
And obviously before putting those guidance together, we spent extensive time talking about our capabilities.
Our confidence in ramping up and hiring and hiring the right individuals in the people to deliver that backlog in.
And this is perhaps the end result.
Our conclusion around what we think we can do so so in this instance, and I don't know if you've heard it from others, but as far as I'm concerned my personal opinion that problem is not the backlog is.
Is to make sure that we have for people to deliver it so.
Sure we haven't very good planning around that.
And I can tell you that when I meet with our global operating team on a weekly basis. The first question I ask is where are we in ramping up the work force. So so it is good news in some ways very good news.
But you are right and I believe that you know.
The right question to ask the team thing or are you are you able to ramp up and that's certainly what we are spending most of our time doing right now.
Okay. Thanks, very much for all the detail.
Okay. Thanks.
Your next question comes from the line of credit data.
<unk> from Raymond James Your line is now open.
Hi, good morning.
Hi, guys you have clearly demonstrated our year to date that the large colder deal isn't stopping you were or your U S operations from.
From rolling up small and specialized companies.
And given that the Golar integrations shouldnt be too much of a distraction for your leadership teams in the EMEA and APAC segments can.
Can you comment on their readiness for for tuck ins on their end.
Yes, I think we.
We are ready.
The right circumstances, I think clearly the team.
Europe would be ready and you are right in saying Frederic.
This will have limited impact on on the EMEA team having.
Having said all that I don't feel we have a gun on their head.
I think I've been saying for as long as I can remember that we would like to grow our central European presence.
But right now I think we haven't found the right partner.
And until such time that we find that right partner.
<unk> very disciplined and continue to deliver on what we have and we have a very good business. So.
So, we'll we'll continue to drive our operation in one day.
If the opportunity presents itself.
And we would like to address this.
This is a big.
No Big population when you look at the pool and Central Europe.
We were in a position to growth.
And do you share the same comments for the APAC region.
Yeah, although the APAC region, Frederick the integration of Goldberg.
Bye.
On a relative scale basis, we're adding 1000 people.
It is.
Transformative for the region so.
Unlike the EMEA region. This is going to be a bit more.
More sizable.
Integration than it would be on a relative scale basis for instance for the U S. So so we have to be mindful of that.
But again.
You know we were going to.
We remain opportunistic and if if there is an opportunity and we feel that that's the right opportunity, we'll certainly going to look at it.
Okay. That's very helpful color. Thanks.
And maybe building on that can we get a sense of the multiples you are now being asked to pay for tuck ins like Earth Con and key WMC I'm not going to try to pronounce the third one but are you seeing upward pressure because of increased competition or is actually the pandemic.
Contrary alleviating some of that pressure.
Uh huh.
I'd say all in all.
We are paying multiples.
They are essentially in line with pre pandemic.
Uh huh.
Pre pandemic multiples essentially.
That makes sense for dose tuck in.
Yeah no. It does makes sense just wondering what what's the puts and takes.
Behind that.
If you had more color, but that's not fun.
Thank you.
Okay. Thank you fredrik.
Your next question comes from the line of Sabiha Khan from RBC capital markets. Your line is now open.
Alright, Thanks, and good morning, just on the commentary around bringing some of the or adding employees over the course of this year I guess, what proportion of that is bringing back book. So you maybe sent home last year and what proportion is looking for new people and can really comment on just what you found is it fairly easy or no growth.
Talent out there while people are at home just some comments on how that's going.
Yeah.
I think you know good firms attract good people.
So so we're certainly not going to sit here finding excuses that we can hire.
I just don't think it would be very credible.
So for now.
We need to find ways and we need to be creative in the way we attract.
Our professionals.
And I'm confident that if we put the right focus and the right attention to this initiatives, we will be both true to ramp up.
So as it relates to bringing back.
People to the firm.
And in some instances actually many instances I see that as positive news to welcome Oh colleagues back.
To their home. So so if we are in a position to do that and if there is a willingness to do that of course.
We will explore that.
As it relates to two colleagues that were part of the firm in the past.
Okay, and then for comment earlier around the activity levels being better than expected through January.
Yeah, I guess is the increased activity levels, you think are related more to the increasing confidence as a vaccine rollouts continue more or better visibility or is it some of the dollars that some reasons of analysis towards infrastructure and so forth being put to use just some color there no I'd say, it's just that we continue.
What we have seen.
And.
At the end of Q4.
It's almost like.
And frankly, it's the perhaps hopefully hopefully I don't have a crystal ball. Please maybe the reversal of 2019.
2000, 2020, I'm, sorry January 2020, I remember, how we finished 2019.
And I was like Okay, what will 2020 looks like with or without a pandemic frankly the year. The way. We had finished 2019 was slightly concerned on.
The velocity and the traction in the business.
Sure.
It turned out to be worse than that wasn't dissipating. Obviously in 2020 now it's probably the reversal I look at the way.
We finished Q4 and I said, okay. Good traction and then when I sat down with our leaders and Helane I sat down with our leaders few weeks ago looking at the results for January.
The teams felt fairly upbeat.
About about January so.
Our fingers cross of course, who knows what's left for it looks like six seven to eight months from now but right now I think the team is fairly this phase is feeling.
Cautiously optimistic.
Okay. Thanks, and then just one last one for me I guess for a comment around the building's end market and some of the pessimism you might be hearing and.
And the investment community I guess, a little credit a little bit of color on is it some of the new work in building is that you know things like data centers health care, that's giving you. Some encouragement looking ahead because of some reason or do you expect generally that you know what.
At some point in the future will be back in that end market to pre pandemic levels, just what youre seeing on the ground there globally.
Sorry can you repeat the question it was breaking up for for sorry, yes.
It's more about the commentary on the buildings and market and for being a little bit more positive. There. Looking ahead is there a positive commentary or smart optimism related to some of these new demand areas within buildings that are starting up is there certain regions, where you're seeing the optimism I guess on the ground.
Yeah.
Uh huh.
I would say.
We say no.
Lot of optimism.
The digital Revolution will bring its shares of <unk>.
Opportunities for WSB, when you talk about commercial real estate.
That we are one of the largest MEP for them in the world. So.
As our clients are rethinking.
The.
Design essentially of the for plant than we've seen many of our.
Of our compete.
Believe of of of our firm is that you know and I've said that in the past and I don't know shoes.
And you heard me, saying, it's I will repeat it again, but but.
But typically.
Consultant tend to do extremely well in times of of huge catalyst.
You know in in a in a slow growth market.
Typically clients will not call their advisors to assist they will be able to do it in house, they will be able to manage to growth.
But when there's a huge catalyst in the market are huge disruptor, that's when clients will call upon their advisor trusted advisers to assist.
And for just trading to change.
So so in good time, and bad time I C. W. S. P. You know illustration of a huge catalyst to be in a position to assist clients. So uhm. So yeah, there will be some some some bumps in the road.
Perhaps on commercial real estate for instance, but then you turn and look at that huge opportunities that and I'm, saying that with with all due respect you know and to me. We we were not hoping for a pandemic frankly for windows <unk>, when when something like that happens.
I see this is a new opportunity for for us to assist our clients and I'll just waiting to change.
That that day, we'll have to work the strength and and and that's the beauty of for being a consultant and having the expertise to assist essentially.
Alright, great. Thanks, very much for that color.
Your next question comes from the line of Guinea tree came ilnytzky from very task and I need that open.
Yes, Hi, Buzzword, Elaine Alex I'm glad to hear.
And thanks for taking a a question a dimitri.
Again, thanks for taking the question. So I just thought deep deep for them to be.
Restructuring costs can you for example break that down between the portion or related to old and I'm talking about the 2021 guidance the force them to relate it to <unk> <unk> and other deals that should have already announced versus the internal causeway alignment.
In for them, so what we've seen in 2020.
Yeah.
Dimitry the vast vast majority.
Of those costs are related to acquisition and and transaction costs.
Mhm, Okay. Thank you.
That's it for me.
Okay. Thanks for Dimitri.
Your next question comes from the line is Maxine Sanchez from National Bank Financial Your line is now open.
Hi for one gentleman.
And I'm ex.
Uhm.
Just a quick question because most of them have been answered when will look at all of a sudden the news flow around the trial for project for me.
No it's changed in terms of our government's commitment to this vertical is but I'm. Just wondering if you don't mind, providing a couple of for maybe keep points in terms of what you're hearing from from our clients directly on on the space ex.
And sorry, I'm actually sit around transit.
Correct, Yeah yeah.
Yeah, No I I think just closer to us here in in Montreal, you know there are talks about the the <unk>. The second Ram line that the would be pictured in <unk>.
And the next year or two which represents you know probably a bigger spent frankly.
The first one so I I don't see.
You know, we hear about <unk>, Texas I speak around you know essentially a replica of what's happening in in California. So.
<unk> to the work continue and and D. U K. So so I frankly, I don't see this stopping anytime soon to the contrary the mobility of of of the people around for these will become increasingly important.
Okay, Yeah, No agreed and just wanted to check it for this for me as well that's all for me. Thank you so much. Thank.
Thank you <unk>.
There are no further questions at this time I'm trying to call back up for the presenters.
Well. Thank you for attending this call today. Thank you for the great questions. I think it's it's true reading a lot of good good discussion, we look forward to a day to you as we are progressing the year and I would like to wish you a good day and talk to them.
C net that famous off the answers from <unk>, ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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