Q1 2021 Stantec Inc Earnings Call

[music].

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.

<unk> invites those dialing in to view the slide presentation, which is available in the investors section at <unk> Dot com.

Today's call is also a webcast. Please be advised that if you were 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 <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.

<unk> 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 Ulta.

Hundred dollar drinking water drinking water and wastewater infrastructure Act, it's 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 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 up seven 4% organically since year at 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 this work will be delivered through our energy and resources and environmental services business units, where are organic backlog growth approached 40% and 25% respectively. During the quarter.

Canadian revenue retracted organically due almost entirely to the reduced scope of our role of Trans moment expansion project. This.

This dynamic which has been incorporated into our guidance will continue to be a headwind for organic growth in 2021.

Offsetting this however is growth in our Canadian buildings business the.

The investments being made in Canadian healthcare facility. This unprecedented and has led to record backlog in this 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 in British Columbia.

Also during the quarter, we generated year over year organic growth and infrastructure from both community development and transportation projects and we expect continued momentum and infrastructure as a result of recent project with like the Queen's Key East extension and the waterfront East Light rail transit projects in Toronto.

Strong account management and business development has driven our Canadian backlog up seven 6% organically since here at 2020 with backlog growth across all of our businesses.

And as in the US energy resources, and environmental services were particularly strong with organic backlog growth approaching 35% and 20% respectively. During the quarter.

We're also seeing continued strength in Canada water business partner as a result of our work on Saskatchewan West side irrigation project.

This project is expected to irrigate up to 500000 acres and more than double the irrigable land in Saskatchewan.

And it's also the largest public works project in the province of history.

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 10 10 per share and adjusted EPS by the end of 2021.

Our balance sheet remained strong as a result of strong cash flow generation and cash management.

March 31, net debt to adjusted EBITDA remained below our target range at zero eight times a day.

Day sales outstanding was 75 days a quarter ended 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 when operating cash flow are traditionally an outflow.

This represents a $99 million increased 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 are $800 million credit facility is currently undrawn, giving a significant dry powder to fund growth through acquisitions.

That alternative faster Gordon to wrap us.

Thanks Teresa.

Today, we reaffirmed our guidance and targets for 2021 are projected lower to mid single digit organic revenue growth for the year is underpinned with our expectation that queue ones organic retraction should turn the corner in queue too.

Then for Q3 and Q4, we expect a strong shipped to growth bear.

Bear in mind that we have not incorporated the proposed use stimulus infrastructure stimulus into a revenue expectations because it hasn't yet could finalize their past and we think it will take roughly one to two quarters. Once this package is approved for revenue to materialize in a meaningful way. So we see this as a tailwind potentially for the last quarter of this year, but more realistically for 2000.

22, and subsequent years.

Before concluding I would like to draw your attention to a recently released 2020 sustainability report, which is available for download through the interactive sustainability section on <unk> web site.

This reported a fantastic resource that describes our commitments and actions towards achieving our ESG goals.

One metric were particularly proud of is the degree to which our revenues support the UN sustainable development goals.

We continue to lead the industry in providing this data, which for 2020 amounted to $2.3 billion.

This represents 49% of our 2020 gross revenue that's aligned with the Uscg's up 7% from 2019.

Underscore the key role our skills and expertise play in the global pursuit of a more sustainable future.

And there is also a few areas, where where we've augmented our disclosure, including enhanced ESG metrics aligned to the sustainability accounting standards Board and the task force on climate related financial disclosures.

On the innovation from last week, we launched our integrated approach to digital services branded a stand Tech Dot Idaho.

Are unified platform combines technology like machine learning digital twins, and parametric designs with our subject matter experts to accelerate and enhance our solution delivery.

Finally, we continue to support our global employee base in every way we can as the pandemic continues to evolve in.

What I would take a moment to thank all of our employees for their continued commitment and diligence and supporting our clients and colleagues around the world. So.

So to wrap up the quarter delivered as we had expected net revenue retracted compared to a free pandemic Q1 20 is we've been messaging for the past few quarters are EBITDA margin improved adjusted EPS was up free cash flow generation was very strong and our balance sheet is in great shape and organic backlog grew $5.

8% all of which supports the reaffirmation of 2021 guidance.

This coupled with a strengthening global economy and the potential for additional infrastructure stimulus. We believe provides a solid tailwind for the remainder of 2020 line into 2022 and with that we'll open the call up the questions operator.

Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure your immune functions turned off to allow your signal to reach our equipment again from star one to ask a question and we'll pass for just a moment to allow everyone an opportunity to signal.

Our first question comes from Denwa Poirier with day yard Mbank. Please go ahead.

Yes, thank you very much and good morning, everyone.

Just with respect to organic growth obviously in Q1 this been a 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 resources could you may be quantified the impact of TNX on the organic growth. Thanks.

Yes.

Has been one good morning.

Firstly it as we as we think about Q too.

As we said in 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.

A pandemic influenced quarter I think it is going to be flat.

Slightly positive in queue too and then we'll see I believe good good organic growth in Q3 and Q for based on the backlog in those things that we're talking about and that should then result in.

That low to mid single digit.

Had a growth that we've been talking about for the year.

And it's interesting as you as you mentioned <unk> like the backlog growth and Ian are this quarter was was truly exceptional the impact of the Trans mountain job.

It's interesting in Q1.

While while we saw that Canada had about seven 6% retraction in net revenue. If we had taken out the impact of of the revenue that we had generated from transalta Q of the previous year, Canada would've been flat.

And it would have taken roughly overall for the company would have been about five 4% instead of seven 4% retraction. So from a net revenue perspective, it's significant and we see that about 2%.

As a headwind that will see even for the full year.

From from a company perspective, we'll see about a 2% headwind in.

Inorganic growth because of the the removal of that revenue from transform but even factoring that in we reaffirm our commitments to that low to mid single digit organic growth for the year.

Okay. That's very good color guard and now pork day reside in terms of capital deployment.

Not active in Q1, despite having leverage ratio well below your targeted levels and showing strength free cash flow number. So I'm just wondering how should we read into effect, but it could be explained by big expiration on many fronts or more because stuck at a certain level and.

Q1.

Yeah, you know that the capital allocation strategy remains consistent.

From from what I have stated in the past.

And so we really are.

Focus on directing our capital toward emanated growth.

Great. We will tell you that there's a lot of activity there that pipeline remains growth for various targets that we are looking at and sales from that perspective, retaining that capital for that purpose is is our priority and the share price was pretty strong in the first quarter.

And so overall, we continues to look for opportunities to purchase share that to the extent, we see a bit of a dislocation in the market and so that remains as well.

The opportunity for us.

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 when they get is in Q1 it seems the good.

Foreman's was driven by better working capital movements in Q1, So what is it a fair statement and what should we expect in terms of working capital movement toward a full year.

<unk> plus 79 million reported for 2020 at the reason.

Yeah. So Q1 has to have a couple of interesting things occur and you're right I think the first time in I remember meeting that Q1 has been the cash flow positive from an operating standpoint, typically because of seasonality it drives to being a net out flow and so we didn't want to play note that.

$99 million increase year over year at about half of that just was attributed to timing of payroll that link to the day after quarter and.

And so we don't want to take credit for all of that increase.

Raising cash.

And reflective better working capital management.

And at the end of the.

Fast that hour.

Scratching your extending has gone down dramatically.

On a comparative basis until.

<unk> has also given are working capital of boost so I would expect that it's going to remain strong throughout the rest of the year.

Because operations are solid we're not seeing any headwinds from an operational perspective that will disrupt our cash flows the focus on GSO remains in our team is just doing a fantastic job.

Focus and continuing to find opportunities.

To keep DSO.

At the level that it's at now so ill overall I think it should be positive for for the year.

Okay. That's great. Thank you very much.

Thank you. Our next question comes from your a link with Canaccord. Please go ahead.

Hi, good morning.

Gordon wanted to chat a bit on the American job, obviously the net.

Featured pretty prominently in in your prepared remarks, if it gets past.

I mean, what's do you how do you feel the industry in spam tech in particular.

Is equipped to meet what looks to be double digits.

Growth and then market demand given.

Cause the sides of the program so.

You said you might you anticipate some impact within one or two quarters of it being.

Being passed so how do you see growth going forward from there more sand type player per month.

Yeah. So we've been giving a lot of thought too you're right. There is the American jobs plan, but even if some of the other ones. The American rescue plan has 350 billion indirect funding to state and local government that they can use on a number of COVID-19 related.

Things, but one of which of course is water and sewer infrastructure theirs.

Some of some of the other free.

Potential stimulus as well so with the American jobs plan layered on top of that we see that is a really really strong tailwind total.

The latter part of this year, but certainly even into 2022. So we've been spending a lot of time thinking about how would we as a 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 <unk> in India to help support a lot of a lot of these things because we do think we're seeing and 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 feel valued based a fuel that.

Static is treated them right through through the pandemic. So that when we all collectively emerge from this will be a net beneficiary of the.

The premium stuff interest ANTEC, rather than being an expert or upset so that combined with our ability to move work around to our 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 we what we believe is is quite a wave of opportunity to come.

Yeah.

Just on that I mean, given the size of what's being contemplated in that act if it if it were to be passed in its current form.

Do you envision a time, where your U S business, particularly your water business would be growing up a double digits organically.

All of the the various programs have 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 seven per cent again here so to stretch to double digits as possible and water I would also see.

Transportation.

A net beneficiary that where we could see some significant growth in transportation public transit close, though resilience well a lot of these things so.

I think from my guest that those will be 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 to support those.

Okay and last one before I turn it over just continuing on this theme.

How would you what do you have to do too.

Prepare for potentially double digits.

Growth in some of these and markets.

Versus how your position now thanks.

A couple of things that we've talked about for 2021 is that this was a year that we came into really focusing on growth.

So certainly growth from an M&A perspective, but also 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 out so again it's.

Really cranking up our our organic growth machine in terms of some of these will come out and <unk>. So talking about contractor is about teaming up already.

As we begin to think about what some of the projects were were already in talking to some of the clients about that as soon as we chatted roaches earlier on there really thinking about how do we begin to share work amongst the various geographies. So these things are all.

Under active discussion down just to be sure that we're ready to take advantage of this when it comes from.

Thanks squared I'll turn it over.

Great. Thanks.

Thank you. Our next question comes from so bad Con with RBC capital markets. Please go ahead.

Okay, great. Thanks very much.

Just on the US I guess one of the theme blue haired coming out of queue for reporting was there are some of the clients from those and market towards just being cautious until the better understood. The priorities of the new administration didn't really give us some insight into the kind of the conversations we're having an understanding some of these bills have a past.

Where 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 roadways in public transit certainly water some of the state and local governments.

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 a funding perspective, so but that said are backlogs in water and transportation overall of the company.

Are strong and it will and will carry us through.

Through the remainder of 2021 in any event really even absent significant additional projects coming in the door. So.

As we talked about I see organic revenue strengthening too flat to slightly positive in queue too and then continued growth through Q3, Q4, and just really a solid.

<unk> and as we go into 2022.

Okay, and then just from the or water comments day, you mentioned in your commentary earlier that you are working up some of the larger and I guess, it's kind of replace some of that pipeline over the 12 24 month period would have to be some of this funding going into some of these.

U S water project, where do you see sort of the opportunity to water space as you kind of psycho through some of the framework agreement you one in the UK.

Yeah. So a lot of those so the UK day in the Australia, New Zealand frameworks have been awarded they've been contracted so we see that in backlog already work, we're continually getting new awards and they will continue to grow backlog, but but the big backlog growth opportunities really are in North America.

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 hardening shorelines strengthening lot of treatment work as well.

And these sorts of things, we're seeing more and more discussion related to how can we treat for those things. So I think overall 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 just digging into the commentary around having to maybe add on staff I guess, if you could give us some color by and market. We're in the U S. A cost and markets are you well staffed where do you see the need to maybe hire more people.

Given where the opportunities I guess I just want to get an understanding of where you'll be all right.

Yeah. So we're actively recruiting when you look at our.

Our number of open postings.

Well over a thousand from from this time last year. So we're actively recruiting.

In Canada, the United States.

K, Australia, New Zealand all of those locations, but in North America as 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 them, there, 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 in water transportation and buildings.

Certainly our power sector is.

Is very actively looking for additional staff.

And as well as our environmental group. So we're seeing as we see organic growth.

Wrapping up through Q2, Q3 to four or higher and we'll be ramping up to support that.

Sorry, if I could just squeeze in one more I go just on a comment around share in some of this work I guess, what some of these bills you force the there might be some of the channel made in the U S element or do you have enough stuff in the U S. And then he can send some correctly workout to some of these center just as an industry I guess, you see that as a 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.

And less related to the services industry now there are some works that we do for the.

The U S Navy and other armed forces groups that that have a requirement for a certain number 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 a color.

Great. Thanks.

Thank you. Our next question comes from Jacob Bell with CIBC. Please go ahead.

Good morning.

I had a question on the.

Your new digital solutions platform, the stand packed up I O.

How big of a revenue driver do you think this will be.

Do you plan on breaking this out into a separate division and.

And what percentage of this.

Platform do you think will be recurring revenue type model I see that you are offering a subscription services as well as part of this division.

Okay.

Yeah, So we do see.

Software as a service and these annual subscriptions as something that will be a king and every vulgar and increasing amount of work.

Revenue generation in a number of space. It certainly in the water industry, we see it being a good opportunities there through some of the the financial analysis model that we've got through some of the.

The model that we're using working with clients as their modeling.

Stream stream flow down break so all these these sorts of things so in terms of how big could get we're still just exploring that I think Jacob and we see that it will take that will 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 a revenue generating perspective, as we move forward, but we're still.

I think 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 it the CH being an important part of our strategy in the years to come.

So our plan is that also that we won't break it out separately that the the the the products that we have that are related to water.

Will still be a revenue generated within water those within transportation still revenue generation within transportation. So it wasn't our intention to break it Oh, it's sort of as a fifth business operating unit at this point.

Do you have a standalone group.

That provides institutional solutions platform or is it more of an integrated type model you use them.

We do it then it it's really coming as as part of our overall innovation team. We have a couple of folks that are are helping to pull us together looking at how we can design. These common platforms going forward. So it is a dedicated group.

And then the impact of the the wind down of of.

A number of these large scale U S transportation projects.

How much of a headwind will about being 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, the organic retraction becomes less and so I think that that that will see going forward that these things have a tail, sometimes it's a long tail, but it does get a little bit less of an impact each quarter.

And we're still.

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 opportunity for some pickups in.

We hope we see that in 2021 would likely more so into 2022 will pick up from as a result of some of the costs, we've already incurred as we negotiate those change orders and get paid we should get.

Get some info is subsequent quarters.

We'll leave it there thank you.

Great. Thanks Jacob.

Moving.

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 in Canadian healthcare.

Healthcare facilities.

Probably because many super hospitals have 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 Thursday, Saint Paul's Hospital that we're engaged with in Calgary, We're working on the Calgary Cancer Center in Toronto, There's a number of new hospitals, we rewarded there we talked about the I'd say the Cariboo regional often in British Columbia, there so those.

Just a number of opportunities that we see come and get 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 bought some some additional awards as well, but we haven't yet put into backlog are disclosed so we just see that.

Great opportunities coming in the healthcare space. It certainly is keeping our Canadian groups busy and we're sharing work at this point with with R. U S group, but some good awards as I mentioned and prepared remarks in the us as well that I think is going to turn R. U S building business into pause side of organic growth in the last half of the on a quarterly basis on the last time.

From the ear also.

Good and hearing rehearing governments pretty much February talking talking up longterm care and how much money they put into that sector.

Well positioned to participate in any of the growth at night.

Results from that.

Absolutely whether it's.

<unk> care 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 a global perspective so.

We're looking forward to some of those opportunities coming along as well.

Thank you.

Great Thanks, better.

Thank you and our next question comes from Chris Murray ATB Capital markets. Please go ahead.

Thanks folks good morning.

So just maybe thinking a little bit about the product portfolio going forward and your energy and resources business. So this has been one of the worst cyclical.

Parts of the business I guess for two years now.

And it certainly sounds like Tim Max is going to shrink a little bit can you just talk a little bit about how you think you want are shaped 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 we saw this quarter.

With changing our contractual relationship on trends Mountain, we're really we're just not running all of the independent contractors.

Through static 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 a real pivot on the power side, we talked we've talked before about the work that we're doing in renewables solar and wind and pump storage and so on and we talked to in the us.

This quarter, we got up to $100 million project to to strengthen the grid in California. So we're seeing a pivot really on the power side, particularly to clean power in mining, we're seeing certainly do the increase in commodity prices copper iron or or.

Certainly at significant peaks from where they have been over the last number of years, but we're also seeing our mining practice pick up into other areas that do support the long term transition also too too.

Cleaner energy sources, we're doing some work on lithium mines in.

In Central and South America required of course for battery storage, so I see that overtime.

Powered group will continue to grow our mining group, particularly with.

As we talked about within <unk> and some of the opportunities that that they have.

That that transition to sustainable mining and so as well as our wire power dams group will continue to grow and we're seeing that already so I think just over time, 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 a higher rate than.

And that oil and gas sector.

Alright sure 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 from a full year.

Certainly we've seen some some really neat little tuck in acquisitions.

But 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 this I mean, one I'm, assuming you're sales thinking about that that's what you want to try to get to this year, but it's too.

<unk>, how does the M&A process been evolving now that.

Sort of ways, we are moving past some of the call. It 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.

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 so the United States looking.

Into the UK, the the Nordics, Denmark in Australia, and New Zealand, and so and the the pipe line of firms.

Come to market right now is really really strong and there's some some larger firms as well they are beginning to come to market. Some of them are are exiting at the end of their investment horizon. So we're having a good look at all of these things as others are as well.

Spend a <unk> again, we will they come out to a strategic these are all decisions that interest.

Things that will have to continue to assess but certainly our appetite.

For continued M&A growth as strong our balance sheet is strong and so we are we will participate in having a look at these acquisitions weather.

Our typical sweet spot of less than a thousand firms albescent those 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 from Los maybe few months.

I think over the pandemic and even before that we were really look looking at how to improve our opportunity to diligence. These.

These these potential acquisition targets from a global perspective, So I think our organization is much more mature now in terms of R. U K and 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 them.

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 a strengthening of the overall organization, certainly maturing and strengthening of it from us and emanating and 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 Michael to phone 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.

I guess, what I would say is that we are a couple of months in two or.

Three year at planned execution so.

Myers portion of our workforce spectrum from home.

There hasn't been a lot of movement per se in terms of flow.

Coming back to the office.

We have download from the last couple of months is at communications with our staff.

Could have been.

Very welcoming of this work.

Personal workplace arrangements.

And having discussions with staff around at the individual level less appropriate for them given their roles given where they are.

And starting to match that.

It's on track.

It is early days.

Okay. Thanks for that.

Next question is just 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 margin you've been fairly active there.

Acquisitions 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 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 Ah reach a continued focus for us I think now we have a a good water platform. There we have a good transportation platform certainly mining is good buildings, a strong but we have continued opportunities to growth and environment certainly continued opportunities to continue to grow in transportation.

Even water so really at the majority of our of our business groups that we can continue to grow and we do see Australia and to a lesser extent 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've been there now for some time and layered an additional acquisitions.

Absolutely.

With with bringing on it and Jenny are in the in the mining space.

<unk>.

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 in in <unk> has we're seeing a lot of cross selling even between our transportation business and water and and building. So we're really getting the benefit of adding these additional.

Resources down there and so that's where I think it's so attractive for us to continue to growth terminated sort of fill out our space there a bit.

Okay. That's helpful. Thank you.

Question regarding organic growth I know.

<unk> had been calling for a retraction in Q1 and.

And you reiterated your full year organic growth.

Target range.

I'm just wondering now if your assessment of risks.

Around being towards the top end of year organic range for the full year versus the bottom and if if that assessment.

Has evolved at all since last quarter.

Considering sort of the start to 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.

They would be also the caveat that as we mentioned early on there that you have taken.

Taking out the the.

The revenue that we had generated from Trans mountain is about approaching at 2% headwind to that organic growth though.

For the year already so while we say low to mid.

We're reaffirming that even with that approaching 2% headwind from from Trans mode.

Okay got it and.

And then lastly, Theresa you had.

A little bit about stock based compensation and the increase your every year.

What did you included in your 2021 EBITDA margin guidance range.

Four stock based cough, when when you set that range.

Have faith said on instead of the prevailing share price at the time that we were preparing our budget and are far accounts. So.

That we've seen as you know at least am pretty significant increase in the share price.

January February.

And so that's kind of us much revenue the range that that that our practice is to not trying to predict where it is going to go to the air reserve based on what that from alien prices so that any fees.

A pleasant surprise that did create a headwind on our on our EBIT margin.

Okay, and so based on the price of the stock at the time that you've been developing the budget would would that.

Sort of led led you to be forecasting kind of flattish stock based copier per year, whereas whereas in fact now.

At least to start the year, it's coming in higher.

Yeah, that's right.

Okay. Thank you.

Okay.

Thank you and we have no additional questions at this time Mister Johnson I will now turn the conference back to you for any closing or additional remarks.

I just wanted to say thanks, 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.

<unk> and I have a great day, everyone and thank you everyone.

And that concludes today's call. Thank you all for your participation you may now disconnect.

[music].