Q1 2021 Stantec Inc Earnings Call
[music], Inc.
Welcome to stand tax first quarter 2021 earnings result conference call, leading the call today are GOR Johnston, President and Chief Executive Officer, and Theresa Jang Executive Vice President and Chief Financial Officer.
The <unk> invites those dialing in to view the slide presentation, which is available in the investors section at <unk> Dot com.
The call is also a webcast. Please be advised that if you are dialed in while also viewing the webcast you should meet your computer as there was a 22nd delay between the call and the webcast.
All information provided during this conference call is subject to the forward looking statement qualification set out on slide two detailed in the <unk> management discussion and analysis and incorporated in full for the purposes of today's call.
Dollar amounts discussed in today's call are expressed in Canadian dollars and are generally rounded.
With that I'm pleased to turn the call over to Mr. Gore Johnston.
Well good morning, and thank you for joining us.
The tech delivered solid performance in the first quarter as we continued to execute on our strategic plan.
Our focus on excellence delivered increased earnings improved margins and strong cash flow.
As we look forward, we're seeing solid signs of recovery with outstanding backlog growth across all of our business units and a book to burn ratio of one two for the quarter.
The water drinking water and wastewater infrastructure active passed the Senate and the six $5 billion water infrastructure financing Innovation Act has been released by the USEPA. So altogether, we see great momentum for increased the water spending going forward.
Mining activity in the U S is also increasing with improved commodity prices and R. U S business development pipeline continued to be very active during the first quarter driving our backlog of seven 4% organically since year and 2020.
This was driven in part by multiple contracts worth up to 102 million and work supporting the maintenance and enhancement of California's electrical grid.
This group of this work will be delivered through our energy and resources and environmental services business units, where are organic backlog growth of approach, 40% and 25% respectively. During the quarter.
Canadian revenue retracted organically due almost entirely to the reduced scope of our role of of the <unk> expansion project. This.
This dynamic which has been incorporated into our guidance will continue to be a headwind for organic growth of 2021.
Of setting. This however is growth in our Canadian buildings business the.
The investments being made in Canadian healthcare facility, the unprecedented and has led to record backlog in the sector.
This drove organic growth in our buildings business during the quarter and we continue to win new projects like the Cariboo Memorial Hospital redevelopment of British Columbia.
Also during the quarter, we generated year over year organic growth and infrastructure for both community development and transportation projects and we expect continued momentum and infrastructure as a result of recent project wins like the Queen of the key East extension and the waterfront East Light rail transit projects in Toronto.
Strong account management and business development has driven our Canadian backlog of seven 6% organically since year end of 2020 with backlog growth across all of our businesses.
Presents to 50 cents per share.
Our adjusted EBITDA margin growth of 14, 7% as the result of improved gross margins and lower discretionary spending I.
I would note that our Q1 stock based compensation expense increased by $11 million due to the increased valuation of our share price.
This is half of 125 basis point impact on our adjusted EBITDA margin in other words, excluding this non cash fair value adjustment adjusted EBITDA margin would have been 15, 9%.
Continued strong cash flow generation meant that no draws were required on our revolving credit facility in the first quarter, which led to a year over year decrease in interest expense.
Earnings also reflected the benefit of the implementation of our 2023 real estate strategy, which is on track to deliver <unk> 10 per share and adjusted EPS by the end of 2021.
Our balance sheet remains strong as the result of strong cash flow generation and cash management at March 31, net debt to adjusted EBITDA remains below our targeted range of 0.8 times.
Days sales outstanding was 75 days at quarter end, which is consistent with Q4 2020 and is down 11 days compared to the same time last year.
We generated $14 million in free cash flow in the first quarter. One operating cash flows are traditionally an outflow. This.
This represents a $99 million increase over Q1 2020.
And while half of this increase can be attributed to the timing of our payroll in the quarter the improvement in operating cash flow is significant.
As I mentioned earlier, our $800 million credit facility is currently undrawn, giving us significant dry powder to fund growth through acquisitions with the.
Matt I'll turn it back to Gordon to wrap ups.
Thanks Teresa.
Today, we reaffirmed our guidance and targets for 2021 are projected low to mid single digit organic revenue growth for the year is underpinned with our expectation that Q1's organic retraction should turn the corner in Q2.
And then for Q3 and Q4, we expect the strong shift of growth bear.
The delivery.
Finally, we continue to support of global employee base in every way we can as the pandemic continues to evolve and I just want to take a moment. The thank all of our employees for their continued commitment and diligence and supporting our clients and colleagues around the world.
Sort of wrap up the quarter delivered as we had expected net revenue retracted compared to a free pandemic queue on 20th we've been messaging for the past few quarters are EBITDA margin improved adjusted EPS was up free cash flow of generation was very strong and our balance sheet is in great shape and organic backlog grew five.
8% all of which supports the reaffirmation of of 2021 guidance.
This coupled with the strengthening global economy and the potential for additional infrastructure stimulus. We believe provide the solid tailwind for the remainder of 2021 into 2022 and with that we'll open the call of the questions operator.
Thank you if you would like to ask a question. Please signal that pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure your immune functions turned off to allow the signal to reach our equipment again for the star one to ask the question and we'll pause for just a moment to allow everyone of an opportunity to signal.
Our first question comes from Denwa Poirier with Asia or the Mbank, Let's go ahead.
Yes, thank you very much and good morning, everyone.
With respect to organic growth of you see in Q1. This been the Ah software compare versus last year would you expect organic growth to become positive in queue to and which respect to organic growth for energy and of resources could you may be quantified the impact of of TNX on the organic growth.
Thanks.
Yes.
One good morning the.
Firstly of as we as we think about Q too.
As we said of the prepared remarks, there I think the queue to from a net revenue perspective, again and there'll be compared to a Q2 20, which was.
Of a pandemic influence quarter, I think there's going to be flat.
The slightly positive in queue too and then we will see I believe good good organic growth in Q3 and Q for based on the backlog of those thing that we were talking about and that should the end result in the the low to mid single digit organic growth that we've been talking about for the year.
And it's interesting as you as you mentioned.
Like the backlog growth the <unk>.
This quarter was was truly exceptional the impact of of the Trans Mountain John.
It's interesting in Q1.
Well, we saw the Canada had about the seven 6% retraction of net revenue. If we had taken out of the impact of of the revenue that we have generated from trans mountain in queue of of the previous year, Canada would of been flooded.
And it would have taken roughly overall for the company would of been about five 4% instead of seven 4% retraction. So from the net revenue perspective, it's significant and we see that of both 2%.
As of headwind that will see even for the full year.
The first from a company perspective, we'll see about of 2% headwind in inorganic growth because of the the removal of that revenue from transform but even factoring that in we reaffirm of our commitments to that load of mid single digit organic growth for the year.
Okay. That's very good color guard and now for the result in terms of capital deployment you are not active in Q1, despite adding leverage ratio.
Well below your targeted levels and showing strength free cash flow of number. So I'm just wondering how should we read into it but.
Critics be explained by big expiration on the many fronts or more because the stock a certain level in Q1.
Yeah, you have the the capital of allocation strategy remains consistent.
For the one I have stated in the past.
So we really our.
Focus on directing our capital toward the emanated growth.
The the gorge will tell you that there there is a lot of the activity. The the pipeline remains growth board very of targets that we are looking at and sales from that perspective, retaining that capital for that purpose is our priority and the share price was pretty strong in the first quarter.
And so overall, we continue to look for opportunities to purchase share that to the extent, we see a bit of of of dislocation in the market.
And so that remains as well.
The opportunity for us when when we believe the time is right, but it really is around that physicians that will be looking to allocate our capital.
Okay, that's great and the last one for me free cash flow typically is when they get it in Q1. It seems the the good performance was driven by better working capital movements in Q1. So what is it the first statement and what should we expect in terms of working capital movements for the full year.
Versus the plus 79 million of reported four of 2020 of the reason.
Yeah. So Q1 ahead of have a couple of interesting things occur and you're right.
The first time in I remember meeting that Q1 has been the of cash flow of positive from the operating downplayed and typically because of the seasonality and drive to being of net outflows and so we didn't want to play note of that.
$99 million increase year over year at about the half of that just was attributed to the timing of payrolls that link of the day after quarter and.
And so we don't want to take credit for all of that increase the the remaining hot.
Practice of data.
Working capital management.
At the end of the fact that our discretionary spending has gone down the dramatically.
On the comparative basis until.
Has also given are working capital of boost.
The expense and that is going to remain strong two of the rest of the year because the operations are solid we're not seeing any headwinds from an operations construction that will disrupt our cash flows the focus on GSO remains and our teams just doing the fantastic job of.
Being focused and continuing to find opportunities to.
To keep DSO at the level of the cat now so overall I think it should be positive for for the year.
Okay. That's right. Thank you very much.
Thank you. Our next question comes from your a link with Canaccord. Please go ahead.
Okay. Good morning.
Gordon one of the child of bit on the the American job obviously the the.
Featured pretty permanently in in your prepared remarks, if it gets past.
Uhm.
I mean, what's the you how do you feel the industry in San Tech in particular.
Is equipped to meet.
Looks.
The double digits grew.
Growth in the market demand given.
The size of the program so.
You said you you might you anticipate some impact within one or two quarters of of being.
<unk>.
Inc. Past, so how do you see growth going forward and or more of Santa Clara per month.
Yeah. So we've been giving a lot of thought too you're right. There is the American jobs plan, but even in some of the other ones. The American rescue plan has 350 billion indirect funding to state and local government that they can use on the number of COVID-19 related.
The things, but one of which of course of water and sewer infrastructure of theirs.
Some of the some of the other potential stimulus as well so with the American jobs plan layered on top of the we see that as of really really strong tailwind two.
The latter part of this year, but certainly even into 2022. So we've been spending a lot of time I was thinking about how would we as of company. We're very good at moving work to different locations, how do how would we even continue to improve on that so how do we share work even better with.
Canada, Australia, New Zealand in the UK of how do we ramp up our operations in Pune, India to help support a lot of a lot of of these things because we do think we're seeing it now the labor market is beginning to get tight already.
Which is one of the reasons why we spent so much time early on in the pandemic investing in communicating with our employees.
We've seen a decrease in voluntary turnover rates, but we really wanted to make sure that our staff field value based a few of that.
The static is treated the right through through the pandemic. So that when we all collectively emerge from this will be of net beneficiary of of the.
The bringing stuff in the sand tech rather than being an expert of seven so the old that combined with our ability to move work around two of various global operations. I think are some of the things that we're looking at as a way to be able to staff up for.
For what we believe is the is probably the wave of of opportunity to come.
Yeah.
Just on that I mean, given the the size of of what's being contemplated and that cause the if it were to be passed and at the current form.
Do you envision of time, where you're you ex business, particularly your water business would be growing up a double digits organically.
All of the the the various programs of have yet to to roll over you can see already our water was has been up every quarter over the last couple of years three 7% again here. So the stretch the double digit as possible and water I would also see.
The transportation.
The net beneficiary of that where we could see some significant growth in transportation public transit close the resilience well a lot of these things so.
I think from my gut the those will be the the two net beneficiaries. In addition to some of the clean energy or that we're getting out of our power group in our environmental services group the support those.
Okay, and the last one before I turn it over just continuing on the same.
How would you what you have to do too.
Prepare for potentially double digits.
Growth in some of these and markets.
Versus how your position now thanks, Yeah. So a couple of things that we've talked about for 2021 is that this was the year that we came into really focusing on growth.
So certainly crows from an emanate perspective, but also of growth from an organic perspective, and so what we wanted to ensure that we're going to get our fair share and then more and grow market share through through is these things come of it so again it's.
Really cranking up all of our organic growth machine in terms of some of these will come out of M. P. Three so talking about contractor as of teaming up already.
As we begin to think of what some of the projects were were already in talking to some of the clients of both that as as we chatted roaches earlier on there really thinking about how do we begin to share work amongst the various geography. So these things are all.
The Underactive discussion now just to be sure that we're ready to take advantage of this when it comes true.
Thanks, Squirt I'll turn it over.
Great. Thanks here.
Our next question comes from the behind Kon with RBC capital markets. Please go ahead.
The great. Thanks very much of this.
Just on the US I guess, one of the theme blue haired coming out of queue for reporting was.
Some of the clients and those and market towards just being cautious until the better understood. The priorities of the new administration. The the only give us some insight into what kind of the conversations are having the understanding some of the bills have a past.
Are you seeing movement, which end markets are still being a little bit cautious took some color on the pipeline of the conversations Rob.
Yes, I do think that.
There's a lot of optimism amongst our clients there when you look at different transportation agencies, both of roadways in public transit certainly water some of the state and local governments of.
There is a huge backlog right now of opportunities that we've got out in the in the transportation space already but there are some agencies that are waiting to see a little bit what's happening.
From of funding perspective, so, but that said are backlogs in water and transportation overall of of the company of.
Strong and we will and will carry is true.
True the remainder of 2021 in any event really even absent significant additional projects coming in the door. So.
As we've talked about I see the organic revenue strengthening too flat to slightly positive in queue too and then continued growth true Q3, Q4, and just really of solid.
And as we go into 2022.
Exactly the thumbnail of water comments day, you mentioned in your commentary earlier that you are working of some of the larger and I guess.
End of replace some of the pipeline over the 12 24 month period of what I'd have to be some of the funding going into some of these.
U S water project, where do you see sort of of the opportunity and the water space is new kind of cycled through some of the framework agreement to one of the UK.
Yeah, So a lot of those the the.
The UK in the Australia, New Zealand frameworks of been awarded they've been contracted so we see that in backlog already work, we're continually getting new new of words, and they will continue to grow backlog, but but the big backlog the growth opportunities really are in North America a lot.
A lot of great close the resilience opportunities down in the U S, particularly in the Gulf area.
A lot of work related to.
Shoreline.
Making sure like strengthening lot of treatment work as well P. Fast in these sorts of things, we're seeing more and more discussion related to how can we treat for those things. So I think overall of of the market is pretty robust, we'll see good growth in water I do believe we will see good backlog growth and transportation through the remainder of this year as well.
Okay, and then just the last one for me the digging into the commentary around having to maybe add on staff I guess, if you could give us some color by and marketing of we're in the U S. A cost and markets are you well staffed where do you see the new to maybe hire more people.
Given where the opportunities I just want to get an understanding of of where you'll be all right.
Yeah. So we're actively recruiting when you look at our.
Our number of open postings were.
Well over a thousand from from this time last year. So we're actively recruiting.
In Canada of the United States.
Australia, and New Zealand all of those locations, but in North America, New address we've talked about for US a big part of it is how do we share work between different geographies. So we're primarily looking for the right people and if we can get them in some of the growth Geography's, Texas The coast, we'd love to get the mayor, but if but if we.
Get them in other locations will take them there as well with our ability to share work around we just are more interested in getting the right people.
And then of course geography would be secondary to where we look so we're looking to hire additional people water and transportation and buildings sort.
The our power sector is is.
Is very actively looking for additional staff.
And as well as our environmental group. So we're seeing as we see organic growth wrapped.
Wrapping up true Q2, 2324, or higher and we'll be ramping up to support that.
Sorry, if I could just squeeze in one more I go just on the common around sharing some of this work I guess now what some of these bills you force the there might be some of the channel made in the U S. The element or do you have enough stuff in the U S. And then he can send some correctly work out to some of the center just as an industry. I guess you see that has the potential concerned with more government dollars.
Coming into the industry.
Yes, we when you look at some of the the buy American provisions they seem to be mostly related to products.
And less related to the services industry now there are some works that we do for the.
In the U S Navy and other armed forces groups that that have the requirement for a certain number of of U S citizens to be involved in their security requirements, so but in general.
That doesn't seem to be a significant impediment to to us being able to to move work around.
Thanks, very much for the color.
Great. Thanks. So thank you. Our next question comes from Jacob bout with CIBC. Please go ahead.
Good morning.
I had a question on the.
The new digital solutions platform, the the stand Tech thought I O.
How big of of revenue driver do you think this will be.
Do you plan on breaking the soda into a subdivision and.
What percentage of the.
Platform do you think will be recurring revenue type model I see that you are offering a subscription services as well as part of the division.
Okay.
Totally revenue, yes, so we do see.
Software is of service and these annual subscriptions as something that will be of and every evolving an increasing amount of work.
Sort of revenue generation in a number of space of certainly in the water industry, we see it being a good opportunities their true some of the of the financial analysis models that we've got through some of the the.
The model of that we're using working with clients of their modeling.
Stream stream flow of dam breaks and all of these these sorts of things. So in terms of how big could of get we're still just exploring that I think Jacob and we see that it'll take that'll be something that will evolve over time, but now we've got we've brought together roughly 40 difference.
Platforms that we had some are much larger than others of course, but bringing it together allows us to co branded I think to give us the opportunity to frequent more cross selling and for everyone to understand what what we have and what we can offer to our client base. So I think it's an important step I think it's going to be become even more important from of revenue.
Waiting perspective.
As we move forward, but we're still I think the determining what percentage of revenue it could be because it'll be different by by water versus buildings versus transportation and so on so little early for us to maybe come up with those projections now, but we do at the stage of being an important part of our strategy in the years to come.
So our plan is it also that we want to break it out separately that the.
The the the the products that we have that are related to water.
Will still be the revenue generated within water those of the transportation still revenue generation within transportation. So it wasn't our intention to break it I would sort of of the fifth business operating unit at this point.
And do you have a standalone group.
That provides instead of June solutions platform or is it more of of integrating type of model of your reason.
We do with any of it it's really coming as of as part of our overall innovation team. We have a couple of folks that are are helping took the fullest together looking at how we can design of these common platforms going forward. So it is of dedicated true.
And then the the impact of of the the wind down of of.
The number of these large scale U S transportation projects.
How much of a headwind will that be in the second quarter.
It's interesting if you looked at infrastructure and the the organic retraction over the last number of quarters each quarter of the organic retraction becomes less and so I think the doctor will see going forward that these things have of tail, sometimes it's a long tail, but it does get a little bit less of an impact each quarter.
And we're still as we're doing this work we are submitting change orders so that change order negotiation process will take some time and we will we get everything we ask for likely non of course, but we do see the the opportunity for some pickups in.
We hope we see that in 2021 would likely more so than the 2022 will pick up as a result of some of the cost of already incurred as we negotiate those change orders and get paid we should.
It gets gets some inflows subsequent quarters.
We've been there thank you.
Great. Thanks Jacob.
Moving on our next question comes from Frederick Baskin with Raymond James. Please go ahead.
Good morning, everybody.
Alright.
God I was intrigued by your comment on the unprecedented investment levels and Canadian healthcare.
<unk>.
Probably because many super hospitals of already did sales so I was wondering which segments.
That particular market are you seeing momentum.
Yes, certainly.
Oh and your your neck of the Woods Frederick there's the Saint Paul's Hospital that we're engaged with in Calgary, We're working on the calendar of cancer Center in the Toronto, There's a number of new hospitals. The rewarded there we talked about the let's say the the caribou regional up in British Columbia, there. So those.
Just just the number of opportunities that we see coming in some.
From both a a Canadian and also an Australian perspective is where we really see significant uptick in the healthcare business and so we've got some some additional of words as well, but we haven't yet put into the backlog are disclosed so we just see that.
Right opportunities coming in the healthcare space. It certainly is keeping our Canadian groups busy and we're sharing work at this point with with our use true, but some good of words as I mentioned in the prepared remarks in the U S as well and I think it's going to turn R. U S buildings business in the past side of organic growth in the last half of the on a quarterly basis over the last time.
Of the year also.
Good and hearing the hearing governments pretty much everywhere talking talking up longterm care and how much money they put into that sector.
Well positioned to participate in any of the growth of Tonight.
Results from that.
Absolutely whether it's health.
Healthcare overall, whether it's long term care facilities or larger or smaller hospitals are healthcare group is very very strong and so very well positioned for for that really.
From of global perspective so.
We're looking forward to some of those opportunities coming along as well.
Thank you.
Great. Thanks sugar.
Thank you and our next question comes from Chris The Marines ADB capital markets. Please go ahead.
Thanks folks good morning.
So just maybe thinking of a little bit about the product portfolio going forward and your energy and resources business. So this has been one of the more cyclical parts.
Parts of the business I guess for two years now.
And it certainly sounds of Tim actually kind of shrink a little bit can you just talk a little bit about how you think you want to shape, the energy and resources business going forward and I'm also thinking about things like carbon capture storage hydrogen.
Some of your other ESG calls in that context.
Yeah, So it's as.
As we saw this quarter with the changing our contractual relationship on trends Mountain. We're really we're just not running all of the independent contractors true.
<unk> that's why the revenue has decreased from an oil and gas perspective, we're still doing all the other work that we were doing previously, but we see of real pivot on the power side, we talked we've talked before about the work that we're doing in renewables, the solar and wind and pump storage and so on and we talked in the U S.
This this quarter, we got up to $100 million project to the strength of the grid in California. So we're seeing a pivot really on the power side, particularly to the to clean power in mining, we're seeing certainly do the increase in commodity prices copper iron or or.
At.
Certainly at the significant peaks from where they have been over the last number of years, but we're also seeing our mining practices pick up into other areas that the do support the long term transition also too too if the cleaner energy sources, we're doing some work on lithium mines in.
And the Central and South America required of course for battery storage, So I see the overtime.
That the power of group will continue to grow our mining group of particularly with.
As we talked about with the journey of and some of the opportunities that that they have.
That that transition to sustainable mining and so on as well as our water power of dance group will continue to grow and we're seeing that already so I think just overtime, we're not planning in any way to to to divest or get out of oil and gas, but I just see the other groups probably growing at a higher rate than.
And the oil and gas sector.
Okay fair enough.
And then going back to M&A in your original comments I think earlier this year thinking about how you wanted to see growth I guess for the full year.
Certainly we've seen some some really neat little tucking acquisitions.
Could I guess going back to thinking about the rate of growth that you want to be able to achieve I guess, a couple of pieces of the assuming one I'm, assuming you're still thinking about that that's what you want to try to get to this year, but too.
<unk> the how does the M&A process been evolving now that we're in a lot of ways. We're moving past some of the call of COVID-19 complications with with getting some of the overview and transaction stuff.
Yeah, we're still very active serving in the M&A space, we've seen the.
Our balance sheet is really strong of course, but if we really are continuing with our strategy. As it is we are being very disciplined as we're reviewing firm certainly looking because we we need needs to be successful from a long term perspective. So we're sticking to the geography that we talked about Canada, even more sort of the United States looking.
Into the UK, the the Nordics, Denmark in Australia, and New Zealand and so on and the.
The pipeline of firms.
Come to market right now is really really strong and there's some sort of some larger firms as well. They are beginning to come to market. Some of them are are exiting at the end of of their investment horizon. So we're having a good look at all of these things as others are as well.
<unk> again, it will they come out to of strategic these are all decisions that interest.
That will have to continue to assess but certainly our appetite.
For continue to have any growth of strong our balance sheet of strong and so we are we will participate in the in having a look at these acquisitions weather.
Our typical sweet spot of less than 1000 firms are less of the other people, but some of the larger ones as well, but it's really for us just maintaining that continued discipline.
As we move forward.
Okay, and and has your ability to do two diligence improved in any in any way shape in the last maybe a few months.
I think over the pandemic and even before that we were really look looking at how to improve our opportunity to diligence fees.
These these of potential acquisition targets from of global perspective, So I think our organization is much more mature now in terms of our UK of European operations in terms of Australia, and New Zealand operation. So we have the ability to to diligence those potential acquisitions using local or certainly in any of the.
Regional resources, and we don't have to send people from from North America to do that so I think that's been a maturing and of strengthening of the overall organization, certainly maturing and strengthening of it from an empty and of diligence perspective.
Okay. That's helpful. Thank you folks.
Thanks, Chris.
Thank you and once again, if you would like to add please.
Please press star one.
And our next question comes from microphone with Teeny Securities.
Please go ahead Sir.
Thanks. Good morning, I was hoping you could provide an update on the progress you've made in terms of your real estate footprint optimization.
Sure.
Hey guess, what I would say is that we are a couple of months in two or.
The three year plan execution so.
Byers portion of art work force working from home.
Out of there hasn't been a lot of the movement per se in terms of.
Yes folks coming back to the office.
We have download the the last couple of months is communicated with our staff.
Could have been.
Lots of <unk> of this work.
First of all of workplace arrangements.
And have a discussion of the staff around at the individual level of what's appropriate for them given their role given the where they are.
And starting to match that.
It's on track.
It is early days.
Okay. Thanks for that.
The next question is just the I guess, some somewhat of a follow up related to M&A, which you've already touched on court.
Just a question about the Australian market, you've been fairly active there with.
<unk> I'm wondering if you can just comment on how you feel about your footprint in that market now.
At how much more.
Additional.
Acquisitions in that market, you think you may or may not need if you're comfortable with where you are at now or or it's a continued focus region for you in terms of further M&A.
It is a a region of continued focus for US I think now we have a good water platform. There we have a good transportation platform certainly mining is good buildings of strong, but we have continued opportunities to growth and environment certainly continued opportunities to continue to grow in transportation.
Even in water so really of the majority of our of our business groups. There. We can continue to grow and we do see Australia and two of lesser extent of New Zealand as a great opportunity for us to to continue to deploy some capital towards M&A.
And have you started Q.
To realize some cross selling benefits as you as you have been there now for some time and layered an additional acquisitions.
Absolutely the.
With with bringing on it in January of in the in the mining space.
The both on the east and West coasts, we have an environmental presence as well and so we see great opportunities to tie that environmental group in with the the client base of <unk> has we're seeing a lot of cross selling even between our transportation business and water and and buildings. So we're really getting the benefit of.
Adding these additional resources down there and so that's why I think it's so attractive for us to continue to growth terminated sort of fill out of our spaced out of it.
Okay. That's helpful. Thank you.
Question regarding organic growth I know you had been calling for a retraction in Q1.
And you reiterated your full year organic growth.
Target range.
I'm just wondering though if your assessment of the risks.
Around being towards the top end of the year organic range for the full year versus the bottom and if that assessment.
Has evolved at all since last quarter.
Considering sort of the start you out of the year with with organic growth.
Yeah, I think we still see that we would we would targeted guide into that.
Low to mid organic growth.
With the with the.
Also the caveat that as we mentioned early on there that.
Aching of that.
The the revenue that we had generated from Trans mountain is about of approaching of 2% headwind into that organic growth of for the year already so while we say load of mid.
We are reaffirming that even with that approaching 2% headwind from from Trans mode.
Okay got it.
And then lastly, Theresa you had.
Talked a little bit about stock based compensation and the increase year over year.
What did you included in your 2021 EBITDA margin guidance range.
Four of stock based cough, when when you set that range.
Have faith debt.
Instead of the prevailing share price at the time that we were preparing our budget and are far accounts, so that we of skin.
Yeah, I'm pretty significant increase in the share price.
January February.
And so that's kind of of us much revenue the range of that that our practices to not trying to predict where it's going to go out of the year is sort of based on what the premium price. So.
Any free.
Was a pleasant surprise that did create a headwind on our on our EBIT the market.
Okay, and so based on the price of the stock of at the time of you've been developing the budget would would that of.
Sort of of leather or lead you to be forecasting kind of of flattish stock-based cop year over year, whereas whereas in fact now it's at least to start the year, it's coming in the higher.
Yes, that's right.
Okay. Thank you.
Okay.
And can we have no additional questions at this time Mister Johnson I will now turn the conference back to you for any closing of additional remarks.
I just wanted to say thanks to everyone for joining in our call today, and we look forward to continuing to connect with you in the near future and then talk about our continued progress so.
On behalf of trees, and I have a great day of everyone in the seafood. Thank you everyone.
And that concludes today's call. Thank you off of your participation you may now disconnect.
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