Q1 2021 WSP Global Inc Earnings Call
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Good morning, we hope that you're all based on doing well. Thank you for taking the time to join the call during which we will be discussing our 2020. Once you want performance followed by a Q&A session with US today are Alexandre L'heureux, our president and CEO and then I'm sure. Our CFO. Please note that the skull that is also accessible on the website.
Cash.
During the call we will be making some forward looking statements on actual results could be different from those expressed or implied in the legislation requires us to do so we do not take any responsibility to update or revise forward looking information, even if street information becomes available.
The 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 of the first quarter of 2021, which can be found on SEDAR and other websites or M. DNA also includes reconciliations of non non interest measures to the most directly comparable on the first measures.
Management believes that these non <unk> measures provide useful information to investors regarding the corporation's financial condition and the results of per patient as they provide additional key metrics of its performance.
These non <unk> measures are not recognized on the right. The Paris do not have any standardized meaning prescribed on to our Srs and may differ from similar at the in the measures as reported by other insurers and accordingly may not be comparable.
Measures should not be viewed as a substitute for the related financial information prepared in accordance with IRS with that I will now turn the call on first of all of the Exxon.
Thank you kind of thing and good morning, everyone.
I am very pleased with our performance on the first quarter of 2021 and before going any further.
Would like to highlight the following three points first net revenues for the quarter were aligned to your expectations for comparison purposes. If we exclude the impact of two less billable days in the quarter than the corresponding period in 2020 organic contraction would have stood at two 2%.
With our healthy backlog and strong project pipeline, we anticipate of returned to organic growth for Q2.
Ken.
Though we started the year with the reduced head count we managed to keep our productivity levels high, allowing us to deliver an improved margin profile and third the.
The quarter delivered a very rob robust cash flow profile exceeding our expectations.
This can only be characterized as a solid start of the year, which is attributable to the actions taking in 2020. So W speak could come out of the spend there, making an equally strong if not stronger position.
I would like now to turn to how we exemplified the resilience as an organization since June of 2021.
Although some of our offices of started to reopen in accordance with government directives on regional guidelines on the capacity most of our work force continues to work remotely.
You need to monitor the situation closely across each region and most recently with specific attention to operation in India, which is current sheet battling the difficult second life.
With the student debt.
That's the Sue did see of the COVID-19 environment, we do expect to send the increase in office utilization by the end of summer for the regions, where vaccinations have been widely administered.
Separately, just a little over a month ago, we took a major step towards the realization of our two.
<unk> of 19, 2021 strategic ambitions, including the significant diversification of our platform with the closing of the goals of the acquisition.
This transaction has allowed us to add another transformative milestones of our history as the global work force of 54000 employees.
And have embarked on a collective journey as the leading global environmental consulting firm in the industry led by contingent of 14000 environmental expert dedicated to advance the world screens.
Session.
Since the announcement back in December.
The eager to start collaborating in order to win work.
The spin goes cold there's leadership teams have been working together since the beginning of the year to build the foundation necessary to ensure that once we close the transaction we would be in the position to unlock the full potential of our increased scale and broader deeper range of solutions to tackle key.
Environmental and ESG challenges around the world.
We are already seeing the benefits of our combined forces did.
Today I am pleased to report that we currently have over 150 opportunities, which we are pursuing together. The in addition to 'twenty Two project awards and seven countries from recently initiated collaborations.
As can be expected the spring you on most of these collaborations abaca or across our urban environment teams.
As we progressed through integration, we expect revenue synergies in our transportation infrastructure and proper 10 buildings and Mark yet to Glu is a new large project the kickoff.
Goldberg of has also seen a good start to the year in Q1, delivering as expected. We are cautiously optimistic that Goldman will deliver better results in 2021 than what was initially from cadence.
Positive start reaffirms our expectation that the addition of soldier will contribute to both strategic growth and value creation for many years to come.
As the leading global environmental consulting firm now more than ever before our experts are ideally ideally I'm, sorry physician to advise our clients on their own transition to a low carbon economy.
As for our own operations on April 20th we announced ambitions.
Climate action through our commitment to achieve net zero emissions.
The rest wsb's value chain by 2040.
To support this achievement, we set of science based greenhouse Guy.
<unk> emissions reduction targets approved by the science based targets initiatives the.
S DTI.
These commitments to proceed on previous targets, increasing the level of our ambitions on trigger of aligning W. Dispute with the most ambitions aim of the <unk>.
Paris agreement, which is to limit global temperature rise to one five degrees Celsius.
Through our net zero commitment. We also joined the race to zero, which brings together a coalition of leaving net zero of initiatives.
With an objective to build momentum around the shift to a day cab carbonized economy ahead of the 26 you on climate change conference of the parties taking place. This November.
We are pleased to join organization across the world and leading the way on urgency tackling climate change with our future ready approach at the center of the supports.
Not only are experts well equipped to understand and adapt to the world's changing needs by advising on and delivering sustainable and resilient solutions.
But our operational excellence create.
Now more than ever of momentum.
Round, the decarbonization of the built environment.
To close the loop on M&A activity since the announcement of Goldman December.
We completed three other strategic acquisitions, adding 500 people to our U S.
<unk>.
Kw mission critical engineering, CK, one that see in ERCOT.
Brought new client relationship Marc Jets, leading positions.
And an increased geographic footprint in the United States.
More specifically kw mission critical engineering with the 175 employees expense on building sector capabilities of the high growth data Center health care, and science and technology markets from the United States, while also significantly increasing our presence on the west coast.
Teekay wanted to see of leading 240 employee of mechanical electrical and plumbing engineering firm based in Irvine, California also reinforce our U S property and building business and the health care Science and technology markets.
We have been committed to growing these complex markets for several years, resulting in our position of the largest engineering firm in the states serving health care clients and the start of our second largest and laboratory facilities.
I think teekay want us see solidifies our leadership in both of these markets, while I think kw mission critical will place us in the top five engineering firm serving data center clients.
Lastly, heard consulting group referred to as part of calm strengthen our capabilities in strategic environmental engineering and consulting services.
Further expanding our geographic presence in southeastern United States.
Clients will now have access to earth costs per priority groundwater plume, and Alex tools, which process simple or complex miracles datasets, helping government agencies on the industrial clients to better understand groundwater pumping nature.
We also recently announced the acquisition of B plus B.
The pace in Zurich, Switzerland, the additional offices across the country.
Hundreds of employee engineering and consulting firm, primarily offers project and construction management and cost management services to both public and private sector clients increasing of strategic advisory services expertise on presence in Switzerland.
Having partnering on numerous bids on successful projects over the years, we are confident that our complementary offering and competencies of the property and buildings and the industry sectors will allow our now 150 employee workforce and use in Switzerland to better serve our clients while favorably position in Ws.
To access a wider client base across and extend the national footprint.
Now that we have covered the increased diversification to our platform I would like to turn to decrease the diversification of our capital structure with the closing of our inaugural bond offering of 500 million senior unsecured notes in April the.
The strong investment grade credit rating of paying through this offering.
Is that other indication of the resilience of our organization has demonstrated during this challenging landscape.
Overall, we strongly believe that there'll be USB has the most diversified platform in the industry.
I would now like to highlight the issue of the major wins during Q1, starting with the reconstruction of the Ied in Illinois, and the United States as part of a 16 miles per adult widely construction to provide an improved transportation system. This project will improve regional and local traffic flow improve low.
The way conditions improve bridge crossings and ultimately improves safety for all users moving.
Moving to the United Kingdom, we are increasing our involvement on the highest speak to with the new scope of work delivering category three checks from the phase one northern section.
Hope covers seven.
22 bridges to fly over 14, culverts are the various cutting and embankments and retaining structures.
And the from our debt.
Tunnel.
In summary I.
I am very pleased with our start to the year. We continued to demonstrate the resilience of our organization of has remained true to the guiding prints two of our guiding principles.
While not only attaining significant milestones and Wsb's history, but also delivering strong results in an incredibly challenging and ever changing environment.
The thing I will now review our financial results in more detail how the over to you.
Thanks, Alex and good morning, everyone I am pleased to report on our results for the quarter were off to a good start for 2021 with strong fundamentals on our key metrics across the organization.
Starting with our top line for the first quarter, we're reporting revenues and net revenues of $2 $1 billion and $1 $7 billion. These results are in line with our expectations considering our reduced work force versus last year. In addition, the impact of adding two less billable days in the first quarter of 2000.
'twenty one versus the first quarter of 2020 explains approximately half of the organic contraction of four 5% that we've experienced in Q1 adjusted for the number of billable days to bring everything on a like to like basis, and considering acquisition growth net revenues were essentially flat compared to Q.
2020, which was for the most part of non coal this quarter.
Moving to profitability adjusted EBITDA for the quarter was $241 million up 10, 3% compared to 2200 $18 million in 2020, adjusted EBITDA margins with Q1 2021 increased to $14 four per cent compared to $12 six.
<unk> in 2020.
Significant improvement in EBITDA margin is mainly attributable to improved productivity across the regions, resulting from better utilization.
During the first quarter of 2021, WSB received government subsidies totaling $8 $1 million, which were offset by additional employee compensation, thereby bearing no impact on adjusted EBITDA.
Our adjusted net earnings for Q1, 2021 was 94 million or <unk> 83 per share up $31 million compared to Q1 2020.
The increase in these metrics is mainly attributable to higher adjusted EBITDA and lower interest expense I'd like to bring to your attention. The amendment made to our definition of adjusted net earnings effective January one 2021, which now also excludes amortization of intangible assets related to acquisition.
This is especially rather than given the impact of the goal of their transaction on.
The the previous definition adjusted net earnings of Q1, 2021 would have been $84 million or <unk> 74 cents per share, which is above current market consensus of 59 cents per share.
Moving on to our cash position.
Cash inflows from operating activities for Q1, 2021, the amounted to $163 million compared to $3 million in 2020.
On the free cash flow basis, we generated 85 million dollar in Q1 2020 compared to negative free cash flow of $90 million in 2020 the.
The significant improvement is explained by our team's sustained sustained focus on cash management.
For the trailing 12 months ended March 2021, free cash flow amounted to $911 million, representing 2.6 times, our net earnings.
Day sales outstanding or DSO at the end of March 2021 stood at the very good level of set of 68 days.
There are 277 days at the end of March 2020.
As of the end of Q1 of our balance sheet remains strong with the net debt position of $182 million and the net debt to adjusted EBITDA ratio of 0.2 of interest following the closing of the goal of their acquisition early April net debt to adjusted EBITDA ratio is approximately one point to the.
The build on the Alex commentary, we're very proud of our successful inaugural of seven year bond issuance of 500 million, which has received solid demand from investors. The strong investment grade rating issued concurrently with the offering is further indication of the strength of our resilient and diversified platform. The objective of this offering.
It was to diversify our debt structure extend our average maturity and benefit from attractive interest rate.
During the quarter. We also declare a dividend of 37 five per share for share holders on record as of March 31, 2021, which was paid on April 15, 2021, where the 14th 49, 1% drip participation. The net cash outlay was 21 seven.
Million as we now look ahead, we anticipate a gradual return into growth territory and expect to report low single digit organic growth for Q2 overall, our backlog is L. T and our pipeline continues to show strong momentum, which gives us confidence in our growth objectives of the rest of the year.
That being said, while we have seen while we have been seeing the positive trends across our region. We remain vigilant on the uncertainty brought forward by the fluidity of this pandemic landscape.
Lastly for modeling purposes, we anticipate the quarterly amortization of intangible assets related to acquisition to be on the 20% to $25 million range. Additionally, as we closed the private placement of related to the Golar acquisition. We issue we issued an aggregate of approximately $3 3 million additional common shares.
On April seven which will effect per share metrics calculation and bringing our total common shares outstanding to approximately $117 3 million.
This concludes my remarks on that back to you Alex.
Thank you Elaine.
Starting the year with the five 8% reduction in head count and two less billable days, where none of them less able to keep our productivity level high.
Allowing us to deliver strong margin.
Lastly, given our performance to date, our strong balance sheet.
The positive momentum in our key markets with high levels of proposal activity.
Our strong project pipeline and the addition to increase infrastructure spending around the globe supported by substantial monetary and fiscal policy stimulus.
We are cautiously optimistic that we will return to growth in Q2 and are therefore reiterating our outlook.
This overall, we believe the disposition favorably to achieve our 2019 2021 strategic ambitions.
Notwithstanding these unprecedented times.
I will now like to open the line for questions.
If you would like to ask the question. Please press star followed by the number one on your telephone keypad.
It would be the Naples.
Young of.
P&C of languish at one of the Street did you remove the Super quick the next one please.
Please standby while the comprised of the Q1 aerostar.
Well first the question comes from the line of Jacob bout of CIBC.
Please go ahead your line is open.
Hi, good morning.
Hello Jacob.
The rapid volume and material costs that we've seen.
This impacting the client behavior.
Are you seeing 88.
Once looking to push out or modify talked on new projects.
No.
I said that the you know.
This is <unk>.
When you look at on productivity levels in the first quarter.
I think it's the first amendment on people are quite busy at the moment.
On the proposal activity level and the strong.
We have now.
We have a good hard backlog, we share soft box on going up so I think all the non I don't see it.
On any trends to push.
Later in the year the work essentially.
Yeah.
And then how about the labor cost inflation.
Are you seeing any of that in our <unk>.
Taking any of that into your.
Guidance for the year.
Look of course, the Suez I know.
That we haven't talked about the inflation in the low long long time.
And.
Of course.
It's something that we're going to be monitoring in the future but on.
As of now of course, the thing on our biggest focus right now is to recruit.
Recruit talent and really make sure debt that we get to the the level of that John that we need to get to.
To deliver the year and essentially translate this backlog into revenue I think that's on our primarily focus but haven't seen just yet.
A significant change in wages for instance.
Think it's probably early.
To make a statement like that.
Okay last question here just on.
Your comments on the MD&A you talk about the proposal activity high across the business.
Our things.
The things ramping as you move through Q2 and.
The ramping.
Q2 versus Q1 of those.
Well generally speaking Jacob as you know are our first quarter is typically.
In relative terms the.
And as of propulsion. The total profit that we will be generating in any given year.
The smallest quarter of the force. So indeed said the way you asked the question.
I expect Q2 to ramp up we expect the return to organic growth.
And typically Q3 Q4 on our busiest quarters, so fingers crossed.
That's the early in the year.
Looking at the trajectory look in our backlog looking at our.
Proposal activity level I think we're feeling good about the start of the year at the mall.
Okay.
These rents tied to vaccination rates.
Not really.
Yes.
Like any given year as I stated before.
Of course vaccination is helpful.
And of course, we are seeing the and delighted the tunnel.
But the ramp up is not tied to that I think we should see.
The level of from proposal activity throughout the second part of last year.
And the early in Q1, so we're feeling good about that.
Okay. Thank you very much thank you.
Your next question comes from John from one of one of the NGL growth capital market.
Please go ahead your line is open.
Yes, good morning, and congrats for the strong Q1 results.
Execution of the color you are.
Thank you. So I appreciate the color you provided the about the cross selling opportunity between your legacy business and Goldberg.
Was just wondering I know, it's still early in the integration process, but I was just wondering if you could quantify the potential revenue.
Energy that could be extracted from this transformative acquisition.
I mean.
Of Hustle of this this is a very hard one to answer its quite hard.
To predict predict the.
The synergistic benefits of the deal and Moreover.
You need to combine that with the.
The supply demand dynamics of the marketplace you need to.
Also look at.
<unk>.
The client base and trying to determine.
The growth this time based on one it gives you so.
Think it's almost impossible to quantify.
The revenue synergies, having said all of that.
The coming quarters of we'll try to provide you with some color.
And I think no the dividends debt.
This deal is a great deal of for the company on bids like we've done in any of our previous deal in the past. Thanks.
Provide you on a bit of color.
And ill give you a few examples on our wins together I think will give you perhaps a flavor for what.
What this deal means for forgiveness, Pete but without a doubt.
With your current view right now pursuing of 150 opportunities together.
And we're feeling good on Friday that the team and the uncertainty things on the shoe closing in March.
Early days, but I.
I feel the.
Both teams are quite positive.
On the prospect of winning together.
Thank you very much for for these could be very helpful. And then shifting to M&A you have been continued to be very active with decades of acquisition, especially in the U S. So I was just wondering if you see further of 14 do you think the ER and the country as you are.
Ahead of the potential U S infrastructure build that might be coming up later this year.
Yes.
<unk>.
Again, it's hard to time acquisitions, I think I've said it on a number of occasions in the past the <unk>.
Hard, but we remained very active.
Since the announcement of of Goldman of will continue to be.
On the right circumstances.
Of course, I'd like to do more of this as part of our DNA.
I see some opportunities to do launch so we'll see how things will pan out.
But certainly the king.
The strength of our balance sheet.
On the start of the year instead.
There are some opportunities for us on to do more tuck ins, we will share.
Thank you very much congrats again.
Thank you.
Your next question comes from <unk> Khan of RBC capital markets. Please go ahead of your lines.
Obama outcome of RBC capital markets. Your line is open.
Okay.
Your next question comes from Chris Murray of ATB clubs on market. Your line is open.
Folks good morning.
I was wondering if you could touch a little bit on what youre seeing in the buildings market I know as we went through last year, there was a lot of disruption and thoughts around.
What.
Proponents might be wanting to do and I'm just wondering if you've seen maybe a change in tone as we're maybe getting closer to the end of the pandemic.
Yeah, well I've been quite vocal about this last year, Chris that the.
That was of general I felt people were concluded in the best too quickly on the state of the health of the profit and dumping markets.
I share that people were putting proper 10 best of the Marquette them and actually any sub sector on all of the sub sector in one basket.
Of course, the aviation has been more challenging of course, the commercial real estate has been more challenging than we estimate of how.
Just on this.
Since the last 12 months, but then you look at our mission critical work data Center data Center and the acquisition of we completed as you look at the health care sector.
The do you start booming.
And we are doing.
<unk> well.
We share a lot of growth in those markets. So so.
Certainly a very important market to us and we will continue to strive.
You need to grow this market I see.
Tremendous opportunities in the market.
And I think I also see.
Tremendous opportunity on the commercial real estate sector in the small for us to rethink and reinvent.
On the way of working in the future.
Perhaps too.
Rethink.
And perhaps the use of some of the commercial real estate.
Buildings are are are essentially.
If we were to see.
People moving more towards an environment, where the work remotely.
Those buildings are not going to be a tier down.
What those buildings are going to be used for is to be seen.
But I can assure you of that that they will be realized.
Frieder.
The drip purposes, and Thats, where W speech in BFS tremendous health.
And the assessed and reshaping the Cds is tomorrow and that's why.
I'm not as negative as some may have been in the past and to the contrary in the years to come that I see some opportunities of that sector.
Okay.
You mentioned Youre of strong product pipeline of your have you seen any new projects either call it restart or new projects.
Come to come to the.
The come to that pipeline.
Look.
I have to admit.
I was quite some price.
By the level of proposal activity.
In the U K for instance.
Of course.
We all know that going all the way back to <unk>.
In the 2019 with the.
On the election the brakes.
So the pandemic.
You know I was looking at debt during each two last year.
Awesome.
Now an increased level of the proposal activity in the West really wondering if this was to last then and looking to Q1 I think it's fair to say that it's been very active.
Clearly in the U S on even Canada, I mean, we Havent touch base on Java today, but.
Canada has done a.
Very well in the quarter and our team should be commended the floor for the good start and Jonathan on again, yet again in China, We do see a very active.
The proposal that activity levels. So.
So that.
Of course, some cautious.
But I think this bodes well for the future.
Okay. That's helpful. Thank you and then just turning maybe to the margin in the quarter.
Just thinking about.
You mentioned utilization, but I'm trying to maybe frame this in the in the.
The context of it.
Is the work that's been coming faster than you can actually staff up or is it just maybe some.
The coming from the way that you've may have been working with restructuring the business over.
Over the past year as we've gone through this and then thoughts around.
Whether or not that kind of margin performance being driven by utilization.
How far can you get on that.
If you really do get back to call. It maybe mid to higher single digit organic growth levels.
Look.
These are all great observation great question Chris.
If you look into if you look at our MD&A and do the math on a reduced workforce and the work that we did in 2020 to streamline the business and get ready for.
To set the business up for future success, and you compared this to our.
Reduced organic growth of reduction in our negative organic growth and you add to debt.
The two less billable days.
<unk>.
Of course, there's a limit to what you can do on utilization.
Thank you.
The run.
Tight ship right now and what I said in Q4 is I am not worried about the backlog right now.
I am focused on and one of the team is focused on is really to get people.
To join W. Speed, that's that's the focus of.
We want to be able to deliver the backlog and deliver the growth we need to hire people. It's a great problem to have.
So as I stated before I'm not concerned about the work.
I wanted to make sure that the team is focused on hiring and getting people in the door.
So that we can deliver on time and on budget.
So it's a bit of the different problem a good problem to have than perhaps what we had seen.
Yeah on the last crisis, where I can work with the.
The backlog of dried up essentially.
Yes.
Alright, Thank you very much for your time thank.
Thank you.
Your next question comes from my Culture from TD Securities. Your line is open.
Thank you good morning.
Hello, Michael.
Alex in your prepared remarks, I think I heard you mentioned that you expect quarters contribution two w's piece of 2021 results to be better than originally expected I'm wondering if you can provide some additional details.
On that comment, including which areas are coming in stronger than originally expected.
Well, we started our discussion.
Late in the summer last year.
Of course, we were in the middle of right in the middle of the pandemic Michael.
And that of course went on it we accrete the price in negotiating the price.
Also taking into consideration of forecast for the remainder of the year and not knowing when the end of the pandemic we come from.
When the pandemic would end the essentially so.
Of course, when you compare our due diligence forecast at the time.
And at the time of the announcement to where we are today I think it's fair to say that the.
On I assume we are in a better environment.
And also on that.
Had not planned for baidu in the election.
When we did this deal I think we were hoping for that but nobody was planning for this.
I'll look at the.
The where the way the world is shaping up right now around around.
And just the Submarket of the art and science and.
Hurt in the environment I'm, sorry Sciences.
I would say that we have very good momentum right now and if we do the strike I think that debt the.
The expertise that we have of WSB combined with gold the right thing.
That would create amazing of synergistic benefits and.
I think this year.
On any different than what I expected in the future.
I'm confident that we may be doing a bit better or better.
What we have planned for early on when we announce the steel.
Okay. That's helpful. Thanks, Alex and just maybe one follow on to that does the better momentum that youre seeing.
Right now is that is that captured in the guidance range that you've given and reaffirmed last night and today or is that.
Lead you to a situation, where there could be upside to that range.
Why do you provide guidance. This is this is more of a margin the signs at the end of the day, Michael I think you provided a range that you believe you will hit the <unk> provided a range of two believes is realistic you don't want it to be too conservative given the one to be overly aggressive.
So I'd say that this morning on.
Feeling let's put it this way this morning I'm feeling.
With what I know today I'm feeling quite good about this.
This outlook.
Okay. That's helpful.
On a fair bit of discussion on the call thus far about the the ramping up of.
Head count to execute the work program that you have in front of you.
Can you talk a little bit more about.
About how we should be thinking about that head count growth.
For what period, you see that happening and what regions. If it differs at all by region, just a little bit more color on on all of that would be helpful.
This is.
This is the.
Youre reading my mind, I mean look I'm getting of reports every week on this I'm very focused on making sure that the ramp up of our people on is taking place on making sure on the attractive right talent.
And the business as I stated the previously.
I'm not concerned right now about the work.
<unk> more than our share of work I think what I want to make sure that we convert this backlog into revenue and in order to do that and getting the more people.
And Thats as I stated before a good problem to have but nevertheless, that's something that we have to.
To tackle.
So the hiring process is fairly very reactive.
Any country you would name right now.
I think it's very very reactive and.
We'll see what it's going to lead us, but the team is very much focus on the list right now.
Okay, and then just lastly, I know you've reaffirmed your full year of 2021 guidance, but I'm just looking at the organic growth portion of that guidance, 2% to five per cent for the year.
Any change at all in the in the various regions you'd you'd previously provided some comments around how you expected the various segments of regions to fare in 2021, just wondering if there's been any change there are first of all of them on your firm.
No not at this point, it's still early days, Michael I think it's 90 days in the year.
There's a long way ahead.
We'll see where how are we going to do in Q2, and just what we're going to be required to deliver in three and four two to assess whether we think that this is.
The right.
The right guidance at this point in time.
But remember that were minus four five in the first quarters from an order to get from let's say five.
Just do the math in two three and four again, we're going to deliver on are we going to need to deliver a good quarter. So thats.
Thats why im saying its too early to call and we'll monitor ginsburg from seeing that we'll have another discussion of August.
Okay. Thanks very much.
Thank you.
Your next question comes from Devin Dodge of BMO capital markets. Your line is open.
Alright, thank you.
Alex culture is a big focus of WSB, it's something we spend a lot of time on.
So hiring ramping up the hill.
Still primarily in a work from home or at least the hybrid work environment.
There's a lot of places can you talk about the approach you're taking to Onboarding. These new hires to ensure that the culture of WSB is maintained.
Okay.
The extremely good question, we're very focused on this of course.
We didn't believe a year ago debt. So we could do all of what we're doing now remotely and.
The hiring is not any different.
This week I come back to it.
And each of us for the hiring of in excess of kits of Adobe SPN I've done it through teams.
The south of that.
Very nicely and I know that the.
On the accountability of recruiting the right people on the business at W space not with the HR.
At least with our operation and with our leaders so.
Of course, we did.
The tools.
And we know the skill set that we're looking for.
But the way to maintain the culture of WSB debt in this to make sure that the R&D dollars on a rolling up their sleeves net.
They know what we need on you know what the.
Good consultant of WSB stands for.
And the having.
All of our leaders.
Now helping.
And recruiting the right down at this to me the secret sauce.
Thank you.
We're doing fairly well on the on that front.
Okay. That's good color. Thank you for that.
And maybe can you comment on what the.
Youre seeing from your U S state and local clients and yet the reopening of the stimulus measures of started to translate into the into more projects moving ahead.
It's tough to it's tough to know for sure.
To your question I would assume yes.
Of course.
To be seen.
Of course, we're now seeing some of our largest hubs of reopening gradually so I think this is good news look in the U K things are reopening gradually I think in the U S. We see an increasing level of activity I expect Canada.
Two of three months from now to be in a good position I think anything.
And the maybe three months from now we maybe in the much better position.
With the vaccination of make going up you're looking at the Australia, the well on Asia essentially all of our folks in Asia are essentially back to work full time.
So I think I am.
Seeing a lot of good positive momentum and hope that.
No covenant government spending will follow and be in a good position but.
The long story short is I believe the underlying trends in debt and this industry on goods and that will remain solid for for years to come.
Okay. Thanks for that the congrats on the good quarter I'll turn it over thank you Devin.
Your next question comes from where the rig.
Yeah of my Mom Kim. Please go ahead of your line is open.
But all of my time is here.
Roman thanks for the niche.
Guys I hopped on the call late so I apologize if you've touched on this already but I was hoping to get more color on your pipeline of M&A opportunities.
Are the targets on your wish list is mainly comprised of companies that you were engaged with prior to COVID-19 or where have you been able to actually in the last couple of months or last 12 months to engage with new companies.
And we'll move forward on those loans.
I'd say the Frederick debt.
We have engaged many of the deals.
I take the plus P spuds.
Switzerland, that's the deal that we have been in touch on current two three years. So this was pre COVID-19, but then you take care of Con that we announced late last year. This was a COVID-19 year.
Discussion so.
I'd say, it's a mixture.
But we are able to a bit like the question on on.
On the hiring process and how do you preserve culture in the remote work environment.
We have developed.
Of.
Engaging with third parties on the acquisition front the.
On a different way of I've conducted virtual droid and the number of countries.
During the pandemic and have been able to engage with companies that I have never engaged within the past and we'll continue to do that so I would say bad debt, it's a mixture of.
The pre COVID-19 relationship, but also the newly built relationships.
Okay and are you seeing sort of just the intensity of the level of opportunities is it similar to what it may have been the two three years ago or even seen it accelerate or decelerate.
M&A.
Global regions.
Very very active right now and I expect it to be.
Very active for for the next 24 months I mean, you see the number of specs that the.
Been created.
In the last 12 months.
No.
I think that 200 billion dollar of.
Capital to deploy in the next 24 months you look at the.
On the fund raising efforts and private equity firms I think theres a lot of capital on the system. So.
And I do expect a very active.
The M&A market.
For the next few years.
And increase competition, but thats always normal mine on that.
Do you expect from very strong GDP growth. So we'll see how it plays out but that's something I do expect on a lot of activity.
Okay. Thanks.
Thanks, Alex.
Sure.
Your next question comes from Dmitry <unk> key of very day.
Your line.
Hello.
Good good talking to you and thanks for taking my call.
Hi, Kevin.
Explain the.
Good day.
Between the positive organic growth from backlog.
Negative organic revenue growth what drives that.
Well, that's it's quite simple the backlog is a good reflection of what we'd be expecting in the future.
And the negative organic growth in the quarter is now what took place in the past on that so of course, that's one of the backlog of Oftentime a good trend of of.
What you may be experiencing in the future.
There's no guarantee because you need to translate this backlog into revenue and Thats why this morning that said the hiring.
The right people on the right number of people with us.
The very important.
But thats typically the <unk>.
On the rationale behind that.
On this phasing associated with the.
Some of the backlog.
Okay.
On the path.
Including the sort of you excluded amortization of debt.
Comparables.
In the Gulf War.
Going forward will be.
The looming debt.
What was the rest of world.
For the year, one of the extremely from new company with debt.
The amortization of intangibles.
The adjusted earnings metrics.
Which was extremely conservative.
What was the rest of world.
In Cleveland.
The some observation on deposits.
Why do the site.
<unk> stopped doing that fall in gold or are positioned well.
A lot of giving given the share sides.
Acquisition of Boulder, we thought the providing you with the additional color on the amortization of intangible and assist you.
And predicting and having better comparison against companies that are not necessarily.
Having to deal with the with the.
That type of acquisition growth I think for you to be in the position to better compare us.
Two of our peer group, we thought that we will be providing you with the.
The additional color.
At the end of the day, so on need to assist you with.
With formalizing of better deal.
Nothing more than debt.
Mhm.
Yes.
Understood. Okay. Thank you.
Thank you.
Your next question comes from the Baja <unk> of RBC capital markets the line.
Okay.
Alright, great Thanks, and good morning.
Is it from the discussion of the hiring process going forward and I think one of your global peers recently indicated that if some of this infrastructure spend does pass the U S design market could grow by 15% to 20%.
Presumably all of your peers will be out of hiring as well I'm just thinking what are some of the strategies, we're planning to implement to make sure that you get the right amount of people has indicated that is your biggest concern right now into the seats at the right time, so maybe some color on kind of how youre approaching that strategy.
Look I mean, we're making tremendous effort with universities to recruit the best balance.
Our brand.
It is very important but also engineers want to come to work from that is working on the most complex on iconic projects. So sort of taking the time to explain the expertise that we have in house and also the vision and what we intend to.
To do in the future something of this quite appealing.
Two to.
Of the young work force and more importantly, I think taking the time to explain.
The working environment and the division and the ambitions that we have for the future I think that the new working environment.
The leaf.
Huge market differentiator, so that too.
It's something that we're on we're keeping in mind.
So look at the end of the day is just to take the time to explain who we are how we work.
And why do we do it.
I think historically, we've been quite successful.
The very strong brand and all of the countries already operates of so I'm confident that we're going to get there, but this is a.
You know a big ramp up exercise and that's something that we're working on right now.
Alright, Thanks, and then you indicated that and maybe I know a lot of your staff for most of it they have come back to the office I don't think on the last call you indicated that you'll take a slow and steady of course of thinking how the work environment changes if at all.
Any learnings are you noticing anything in that market or how you might be able to apply to North America I want to reopen the or is that sort of things back to normal range.
No no I don't think it's never going to be back to normal I think we need to to forget. This I think we need to look at this differently.
I think the flexibility is something that.
Just kind of bit of has to be part of our new working environment, having said all of that.
And my personal opinion to come up with the global view global principles on guiding principle around what's our W dispute what sort of view.
It's our view of the of working environment of the future.
You've seen banks, making some announcements and so this is our views that jpmorgan or Goldman Sachs and so the tech world.
Applying there on ambitions on what do you think life will looks like.
We are going to do the same thing for WSB, all I am saying is.
I believe the answers will come naturally.
And the benefits of fine, we will really get that exactly what our people are looking for and what Ive said this before announcing that we can cut the real estate by 30%, 40% of it makes all sorts of announcements.
I believe that from a cultural point of view I need to share from our people.
And do what's right for the business on the longer term and what's right for some of the younger generation at the end of the day.
On the Allergan leaders of the future. So just need to take the time to assess what's right.
For our environment, what's right for our industry much restaurant business and.
And what I said on the fastest.
We need the benefit of time to assessments.
It will be the best course of action.
Our formalizing the view.
Yes.
As we speak and one of the time is right well, we'll make the announcements.
And I agreed that it's going to have to meet the sooner rather than later, so we're working on as of right now.
Great and then just one last one from me I guess you know one of the things are industry of had to do on your sources identify where the puck is going in terms of end markets. The water and environment have been quite active on growing area of micro look forward beyond the pandemic now what's the.
End markets are you preparing to growing where do you see the opportunity over the next couple of three five years.
Yes.
I have an idea I'm not going to lie but we.
We are working on rolling out our next strategic cycle and putting together.
And our next strategic plan, we actually officially kicked off that process last week with our team members.
So we're going to take the time to gather our thoughts around this take the time to reflect.
During 2021 on where we wanted to take the business forward on one of the time is right and one on dealer next plan. That's when I believe that I should be making this announcement.
Great.
On one none that I don't want to talk about it but we just need a bit of time to gather of thought to take the time to reflect.
And I don't mean to be brought the menu I'm, just saying that.
We're going to be unveiling our plan early next year and and right now I think we should be focused on delivering what we have.
And take the time to decide where we want to grow on next.
Okay that makes sense appreciate the color. Thanks.
Thank you.
There are no for the questions at this time I'll turn the call back over to the presenter for closing remarks.
Well thank you.
Everyone for attending this call. This morning, we look forward to updating you on Q2.
For your support and if we can answer any question of funding. Please do not hesitate to reach out. Thank you very much and have a great day.
And this concludes today's conference call. Thank you for participating you may now disconnect.
And that's on a call for the whole social team worked.
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