Q3 2021 WSP Global Inc Earnings Call
Most of them have done finished here good morning, ladies and gentlemen, give me out of coffee all skinny for next till there is he touched twice its emptiness didn't advert yard to Duke Levy SP, well come to double U S piece 2021 second quarter results conference call I would now like to turn to anything over to Quentin Weber Investor Relations.
Please go ahead Mr Weber.
Good morning, and thank you for your time today, we hope that you're all safe and doing well on today's call. We will be discussing our 2021 Q3 performance followed by a Q&A session with us today.
One of them.
N Cen and other me show our CFO.
Note that this call.
So accessible on our website and via webcast.
During the call, we will be making some forward looking statements and actual results could be different from those expressed.
We undertake no obligation to update or revise any of these statements.
Relevant factors that could cause actual results to differ materially from those forward looking statements are listed in our most.
Most recent management discussion and analysis.
Joining the call may refer to certain non <unk> measures. These measures are defined in our management discussion and analysis of the third quarter of 2021 as well as our management discussion and analysis for the year ended December 31st.
Which can be found on SEDAR and on our website.
Our MD&A also includes reconciliations of non <unk>.
The most directly comparable.
Measures management believes that these measures provide useful information to investors regarding the corporation's operations financial condition and results of operation.
They provide additional key metrics of its performance.
When I address measures are not recognized under our authorized did not have any standardized meaning prescribed under <unk> and may differ from similarly named measures as reported by other issuers and accordingly may not be comfortable these measures should not be viewed as a substitute for the related financial information prepared in accordance with item for us with.
I will now turn the call over to Alex.
Thank you Quintin and good morning, everyone. I Trust, you are well keeping safe.
Today.
Let me begin begin by saying I'm very pleased with our performance in the third quarter, our focus on discipline continue to deliver strong results.
Before we go any further let me highlight three key points.
The first.
Third quarter has delivered results in line with our improved guidance year over year, our adjusted EBITDA margin increased by 100 basis points on our adjusted net earnings per share grew by more than 30%.
And our balance sheet and cash collection remains strong.
Second.
Across our markets overall proposal activity continues to be robust and our win rate is yields are healthy backlog with an overall organic growth of five 5% year to date.
What is just as promising as the recent U S congressional passage of the infrastructure Bill.
Third.
Our Golden acquisition continues to deliver results above expectations fueling continued advancement in the urban environment service sector.
Integration activities are progressing according to plan and so far over 50 golder leaders I've undertaken key leadership roles around the globe.
We are finding the addition of the Golden breadth talent attraction advantage in a highly competitive market.
The strength of our urban environment practice positions us well for the global transition to Green economy.
As you are all aware the United Nations COPD twenty-six summit is completing this week with the stated goal of accelerated accelerating action towards the goals of the Paris agreement in the U N framework convention on climate change.
As the World continues to pledge action WSB expects to be at the forefront of defining solutions for our clients that our future ready.
Rising and guiding them on the best way to navigate their business within a low carbon economy.
Delivering on their pledges offered and such forums.
In fact, we are actively observing net zero driver is creating many growth opportunities for our teams across the globe.
The patterns of spending in a post pandemic economy shift.
We remain committed to not only supporting but leading the worlds green transition through proven scientific approaches and smart engineering.
This quarter saw us achieve some key re conditions.
In addition to numerous project Excellence award in the U S, Australia, Europe and Canada.
We are proud that <unk> achieved a number one ranking among buildings top 150 consultant list in the U K moving.
Moving up from the eight position as the previous survey.
This demonstrates our growing leadership in the proppant 10 building market in the region.
Even as we see many markets Flores conditions related to global pandemic remains fluid.
We continue to monitor registration across all of our operating locations and then that project delivery in regions with increased restrictions.
In this quarter, we continued to support flexible work arrangements for our people.
Some staff are choosing to return to the office environment, while others.
Like our colleagues in Australia, and New Zealand.
I've experienced lockdowns we.
We continue to follow our business continuing to your plans and focus on helping our people to be safe and productive wherever they are located.
Separately, we were pleased to announced strategic acquisition of Banco Kirk in October I think capabilities and our profit Tim building sectors and growing WSB structural engineering practice under U S West coast.
Not only did.
This recent acquisition helped to achieve our strategic goals for the U S.
It is also just the latest tried and growing WSB and the U S.
In 2021 alone through our acquisitions, we added more than 1900 professionals to our team and during the last three year cycles, our head count is more than double.
Our scale in the U S and I recognize the ability to deliver on projects, a significant complexity and scope bode well in light of the upcoming opportunities and momentum in the market, resulting from a significant infrastructure investment around the globe.
With the congressional passage of the bypass bipartisan infrastructure investment and jobs Act in the United States.
This will make historic investment in rehabilitating modernizing and transforming its infrastructure, which is obviously really good news.
Our U S clients are continuing to move forward with their capital plans and now with this positive outcome. We believe we will see more substantive projects in late 2022, or 2023 as funding becomes clear and accessible.
And Canada, there'll just be seeing increased project demands.
All thing from both private and public investment.
The federal government alone has committed to more than $100 billion of infrastructure funding over three years, including approximately $18 billion in green spending towards the Paris climate accord.
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This shift towards ESG and climate change will be felt in all sectors as part of the post pandemic spending and we are well positioned to capitalize on this.
We also see opportunities coming from the U K, where it W. B is exploring project potential as the government recently released its plan to spend all health education.
Sport and other public services next year, increasing its investment three 8% a year on average.
And similarly in Australia. The infrastructure market has received an allocation of 225 billion Australian dollars for general government sector infrastructure spending.
So let me just take a moment to highlight a few notable wins during Q3.
We were recently selected for a 500 million U S dollar in definite delivery and defend that quantity contract, where <unk> will serve as the managing partner of the winning joint venture.
The contract will directly support the U S. Navy shipyard infrastructure optimization program and will focus on modifying and replacing infrastructure to increase efficiencies workflow and operation within the shipyards.
Bolstered by our fruitful collaboration with our new Golder colleagues, our leadership in advancing the green transition of what our future ready approach helped to win several pioneer projects.
In the Nordics, we are proud to have been chosen to kind of adopt the environmental baseline investigation in support of establishing the world's first energy Islands.
Marking the beginning of a new era for large scale offshore wind power when.
When complete the two energy islands will supply enough power for 6 million households in Denmark.
Continuing the team of projects arising from the Green transitions were also selected to serve as owners engineers and building, Canada. While candidates first net zero power infrastructure using alarm cycle technology, representing a major step toward decarbonization of power generation.
In Canada.
In Australia, New Zealand, we continue to bring our transportation infrastructure expertise to bear on major roadway programs.
And then you assignment and use helium WSB will investigate design and supervise construction for road safety improvements across a series of corporate doors across New Zealand with the objectives of.
Of reducing debt and serious injuries from roadway incidents by 40%.
In Australia, we will be providing environmental sides investigations geological and geotechnical modeling and design services for the North East Link project, which has a total capital value of 14 billion Canadian dollars.
Supporting the delivery of these projects our teams of experts around the world.
We continue to focus on talent retention to a strong culture of teamwork inclusion technical excellence and professional development.
In Q3, we grew our head count through focused recruiting efforts.
And we are proud that talent is seeking <unk> as an employer of choice.
We continue our dedication to seeking and retaining the best in the business to continue to meet our client and project commitments.
I will now review our financial results in more detail.
Alone.
Up to you.
Thanks, Alex and good morning, everyone. I'm pleased this morning to report on our new on our results for the third quarter of 2021, driven by organic revenue growth in all segments and favorable results from recent acquisition.
Let's start with our top line for the third quarter revenue and net revenues for the quarter reached $2 7 billion and $2 billion up 24% and 20% respectively compared to Q3 2020.
The increase was driven by an overall organic growth of four 3%.
Moving to profitability adjusted EBITDA in the quarter reached $378 million up 27% compared to $297 million in Q3 2020, largely due to the contribution of recent acquisitions.
Adjusted EBITDA margin for the quarter reached 18, 6% compared to 17, 6% in Q3 2020 the <unk>.
Improvement in adjusted EBITDA margin is mainly attributable to the higher margin profile of recent acquisition and improved market condition in multiple regions.
Our adjusted net earnings for Q3 2021.
$180 million or $1 53 per share up 36, and 32% respectively compared to Q3 2020. The increase in these metrics is mainly attributable to higher adjusted EBITDA our backlog at the end of September 2021 reached $10 billion represents.
11, six months revenue up 19% in the nine month period, mainly due to acquisition growth and steady organic growth on a constant currency basis backlog grew organically by five 5% compared to the backlog at the end of December 2020 overall proposal activity.
It used to be very robust across the business.
Moving on to cash position cash inflows from operating activities in the nine month period amounted to $547 million compared to $743 million in 2020 on a free cash flow basis, we generated 276 million in the nine month period compared to 500.
And $1 million in 2020 higher free cash flow in 2020 was mainly driven by death role of income tax and other businesses in some jurisdiction and increased investment in working capital in 2021.
Support our growth for the trailing 12 months ended June three.
2021 free cash flow amounted to $540 million, representing one three times, our net earning DSO.
DSO at the end of September stood at a very good level of 73 days compared to 72 days at the end of September 2020.
As of the end of Q3, our balance sheet remained strong with a debt our net debt position.
$1 1 billion and a net debt to adjusted EBITDA ratio of 0.9 drained.
During the quarter. We also declared a dividend of 37 five cents per share for shareholders on record as of September 32021, which was paid on October 15, 2021, with a 54, 2% drip participation. The net cash outlay was $22 million.
This concludes my remarks, Alex back to you.
Thank you Elaine.
So given our continued performance in line with expectations built on the strong performance from our platform.
2021 acquisition.
We also will with our continued discipline in managing our business and serving our clients and also our resilience in adapting to changing market demands and sustainability and healthy backlog.
We are therefore in a position to reaffirm the financial outlook for 2021 issued in our Q2 2021 press release.
And that adjusted EBIT the range.
Narrow and now expected to be between $1 3 billion.
Two 1.32 billion.
In conclusion I am pleased with the continued momentum we have experienced in the third quarter and very proud of our dedication to achieving a 2019 2021 strategic ambitions and.
In early 2022, we look forward to sharing our next three year strategic plan with you as we continue to chart and exciting future for WSB I would now like to open the line for questions.
Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
So just a moment to compile the Q&A roster.
Your first question comes from Jacob.
Jacob bout.
Please go ahead.
Good morning.
Hello, Jacob good morning.
How should we think about the.
The impact of the U S and for Bill beef costs for <unk> I guess the obvious one is the conversions of soft backlog into hard backlog.
I guess, how quickly can that conversion happen and then as.
As we think about organic growth in Americas going forward does that move you from kind of mid single digits to mid to high single digit organic growth rates exiting 2022.
Yes.
Look I mean, it's it's fresh off the press for Jacobs, So like Julia we are.
We were pleased.
The city announced on Friday last week, President Biden is expecting to sign.
The bid on November 15.
After which.
This will trigger for the government agencies to lunch Derrick and administrative grant.
And this will take time, obviously, so so it is expected that this process will last at least anything between three to two.
Two six months before we see the funds.
And trained to pipeline.
Clearly our clients at the moment power.
Alright excited.
Obviously also a nervousness about the ability to deliver which I haven't seen.
And then a very long time, so, citing this is clearly a positive.
A positive outcome.
As it relates to organic growth.
I think.
Clearly as I. Just stated this is a real positive for U S business over the year, we grew our our soft backlog.
Bye now.
Seven soldiers as if I'm not mistaken just a year to date.
And obviously.
And the ability of our clients to have certainty around the funding is probably what drove.
The arm.
The issue of converting the soft backlog in hard backlog. So so this is clearly a positive for us.
How this will translate into the marketplace.
And how quickly clients will be eager to.
Two.
Transformer or transposed to sub backlog into hard backlog has to be seen.
But it's clear that this is this is positive as it relates to organic.
Okay I appreciate those insights and then maybe my second question here is just on the sustainability of margins in a very solid in the third quarter, but as you move into 2022.
How are you thinking about margins given wage pressure inflation in the face back of some of the discretionary cost since reopening.
Sure.
Obviously wages and then inflation something we're very much a focus on at the moment.
We are.
Yes.
We are approaching it.
We are cautiously optimistic.
And the next plan will do everything we can and that should not come as a surprise to continue.
To improve our performance, but this is this is obviously something that we are monitoring right now and a very very carefully.
As you know Q3 is always the quarter, where we generated the highest margin profile.
Having said all of that gives them the outlet.
Throughout that we provided.
Clearly we are expecting for this year.
Improved margin profile compared to 2002, I mean, which is good news and clearly Jacob as I've always said in the past.
I'm, a believer that there's room for us to continue to improve and that we will do everything in our power to continue to improve.
Next year and the years after.
Okay I'll leave it there thank you very much.
Thank you Jacob.
Thank you our next question comes from.
From Raymond James Please go ahead.
But my thanks.
While net bank debt.
Yes.
Hi, guys its spilled on them.
Jacob's question, obviously this week's passage of the U S infrastructure Bill is positive.
Perhaps more importantly, you've got massive opportunities related to the net zero transition on a global basis. So to me. It feels like this sector is poised to enjoy above average organic growth over the next four to five years.
Can you share that view and how should we think about that from that perspective.
I think it's a fair assumption.
<unk>.
Fredrik and no doubt the latter.
About it I think our environmental sector urge environmental sector right now.
Performing way above our.
Our CAGR growth organic growth rate.
The last I'd say, a decade frankly so.
I look at our performance year to date and I look at our performance for the quarter.
This is by far arm.
Our.
Fastest growing sector at the moment.
But I'm also very excited about the transportation sector.
In market in the U S for instance, but I mentioned.
All of the plans and infrastructure bills.
Sales, but this infrastructure plan.
Various government came up with in Canada, and Australia, and the UK and the Nordics. So so I think.
Let's not just forget that.
All of our end markets are interconnected.
And that the work that we do in the environment is obviously and often time in preparation for more work.
In the transportation infrastructure and building sector. So.
So I think this is this is good news because the work that you typically do in environment is upstream work. So so let's wait and see but all in all I think this is this is a real positive.
Okay.
Thanks for that Alex.
My other question is relates to.
Perhaps opportunities where.
WSB or colder would previously not have been able to bid on I mean are you seeing more opportunities.
Nature, where that that shows sort of the revenue synergies this year the combined firm.
Generate are there are there good opportunities at <unk>.
Yes.
A company.
Absolutely Frederic I mean, that's.
I'm not seeing just a few opportunities I'm seeing many many opportunities in the funnel.
I'll give you. An example, if you just take the mining sector for instance, we know that at the moment.
We can.
Agreed to disagree on the terms, but let's assume that we collectively agree that we are in a goods.
Not a super cycle in a good cycle.
Golder as the leading firm.
Below ground engineering in the mining sector WSB as one of the leading firm in above ground engineering.
And most of the Capex typically on a mining project will take place.
Above ground.
And everything that has to do around the mining project.
Golder on a standalone basis was not in a position to carry out that kind of work WSB. We are experts in that type of work. So some combination of Boulder and WSB in that regard is just incredible and that was the old thesis behind this investment.
So this is just one example, but we are we are bidding jointly on a number of projects right now.
<unk>.
We've been quite successful, let's not forget that ws being golar has a history of working together as well. So it's not like two firms came together and we didn't know one another.
We had the utmost respect for the expertise that they were bringing to the table and then so is done so so I think it's.
We're very pleased so far with.
Would the outcome, but the joint bidding activity that them as a result of it.
Alright, Thank you very much.
Thanks.
Your next question comes from Chris Murray from ATB Capital markets. Please go ahead.
Thanks folks.
Turning back to the margin question, a little bit I guess the question I've got is just looking at the outlook and certainly pretty good growth, but just.
Just I guess a question around utilization and your ability to be able to bring in additional work.
And how do you feel about your current staffing levels and can you run more volume through the same cost base.
Good morning, Chris look at a number of good questions.
And this question Luke.
The end of the day, if you just look the last decade.
And you look at the cheaper revenue, though we have been able to generate per employee.
Yes.
<unk> simply it has.
Has increased over time.
So starting with your last question, obviously, we are in a position today to do more.
With less.
For a variety of different reasons first we are perhaps more efficient over time and over the last.
Many years, we were able to leverage technology to our own advantage.
Which is which is good news.
And clearly there is improved productivity right now and we've experienced that for.
During the pandemic, but also pre pandemic, so so overtime and during this last strategic cycle, we have been able to become more productive.
More session.
And the way we deliver projects so.
So that's good news and as it relates to margin.
Look.
And I mentioned it before.
Yes.
The trending around margins cannot just be looked into one quarter. It has to be looked at over time and yet again, if I look back the last five six years.
System, we have been able to improve our margin profile and Thats clearly the goal that we will be setting for for our business in the next cycle, there's no doubt about it.
But the organic growth also is equally important that we have.
We haven't.
I look at the underlying trends in our industry and I think that bodes well as well for organic growth. So we have to to take advantage of that.
The market that is in front of us.
And I'm confident.
We would be able to take advantage of it.
Okay. Thank you.
And then the other comment that you made in talking about margin profile was about the acquisitions.
And I'm, assuming you're referring to colder but is there anything else that we should be thinking about in terms of the impact of recent acquisitions on that margin profile.
It's certainly not just golder.
I look at the recent acquisitions that we completed.
And mechanical electrical and.
In the U S certainly building our U S platform out west.
Clearly the Olympics will be a big thing in the next few years and having a strong MEP platform.
West and in the U S was very important for us.
Barring a structural firm in L. A it was extremely important to us.
And then you look at the recent acquisition that we completed kw in the data center, but the mission critical and data center.
Sector, which right now.
Is performing at a very very high level.
Probably our highest margin profile into group at the moment.
And we are acquiring market share and continue to.
To expand our presence in that sector, so that to US, though was a smart move by by the team and I'm very pleased by that so so I'd say this year all of our acquisitions.
Perform extremely well and I expect them to continue to perform like that hopefully obviously next year.
Alright Thats helpful. Thank you for pass it over.
Thank you.
Your next question comes from Brian <unk> from Deutsche Bank Capital markets. Please go ahead.
Yes, good morning, everyone.
Congratulations for the good quarter.
Alex when we look at the organic growth curve geographic segment, obviously very strong in Canada. The U S. Latin America UK.
But you mentioned continued softness in the Nordics. So could you provide some color on what is driving the softness.
The ability to recover and if you would exclude the nordics how would look like the organic growth. If you would assume a more normalized level for <unk>.
For the Nordics.
Yeah.
I have not run the math, but anyway, if I was to exclude the nordics.
But.
It's clearly going to be much it would be a much higher.
I'll give you a different answer if we were considering our acquisition.
And.
To be organic growth this year, if I look at the organic growth that <unk> experienced.
Organic growth at our mission critical business has experience on prop.
Proppant 10 buildings business of experience.
We'd be in the high mid single.
Single digits, so could be a very strong quarter from an organic growth point of view.
That's very positive.
I run the math without without the Nordics I think Cadillac could come back to you offline and give you that answer.
But at.
At the end of the day what.
What happened in the Nordics.
The way dependent make was manage.
Perhaps has certainly.
And our clients being in position to procure work.
It's been has been clearly a bit more challenging.
In the region.
Adjusted me be clear on this I think we have an incredible business in the Nordics.
Have a leadership position.
We are one if not the only international firm who has.
Okay.
Who has the opportunity to perform in the regions. So.
So we entered that market in early 2000, and we're extremely pleased about about.
About our presence in the region.
There was a change in leadership, which was announced in the last quarter. If you recall.
And it's a leader who is taking over and has been part of the Gogo team for many many years.
And I'm going to be there next week and I believe that.
The future is bright for that business.
It's just that the current or the current end market environment is a bit more challenging but I think in the longer term is going to be a good market for WSB no doubt.
Okay, that's great and maybe for a late DSO increased sequentially by five days and while seasonality typically brings down the number in Q4, so any color on what drove the increase quarter over quarter and whether we should see.
Five or six day improvement.
In Q4 like we normally do.
Yes.
Thanks, Ben when last year, we have to remember Q4 was a really good quarter.
So we're still guiding between 73 and 78 days for 2021.
We're obviously supporting the globe right now so that impacts.
Are we are investing in working capital.
But.
We should get to the lower end of the range.
By the end of the year than the way, we would look at it.
Okay. Okay.
Alex you are now obviously they are well on track to deliver on your three year plan and getting closer to introduce the new one so without giving us specific numbers any color about the direction or trends, we should be aware of.
Look Ben.
I don't think this should come as a surprise, but we have planned to go up.
Yeah.
We will do.
I mentioned it earlier on that.
But.
The underlying trends in our industry are.
I think it would be fair and I think we would all collectively agree that there are strong.
And I believe wsb's uniquely positioned.
To take advantage of those trends.
Not only into urge environment sector, and I mentioned before we will.
We have only one ambition in that regard as it relates to an urban environment.
And our future ready program, we want to be the leading firm in the green transition full stop that's our ambitions.
So I'm not sure I'm not telling you anything.
You don't know already or surprised by it but but.
It's certainly going to be a cornerstone of our strategy to continue.
On our journey.
Having the aspiration to be the leading firm in.
In this space.
Not that we're not going to rest until we get there.
And that will be obviously, a key ambition of our next three year plan.
Okay.
I think we are going to hopefully.
We have we have hopefully ever.
Good thing in our toolbox to exceed the organic growth rate.
We were able to generate over the last decade on a CAGR basis.
I think we have the right platform, we have the right leadership team.
We have the.
The right people with a board that is believing in the management team and is believing in the vision that we are setting for the business and on top of it we have.
Very strong balance sheet.
With the balance sheet now that there is below one time leverage.
This year given the strong performance of the business, we were able to Delever very quickly golder acquisition.
So we are entering this strategic cycle with a very strong balance sheet.
A renewed leadership team.
A strong board.
I believe.
Uh huh.
Our strong track record.
And with good margin profile.
So I'm looking at that.
At all of this in.
Remember entering.
Our new strategic cycle in a better position so.
So I am excited by it and I look forward to updating you.
In the new year.
Yes.
Perfect that's great color thanks for that.
Thank you.
Your next question comes from.
From RBC capital markets. Please go ahead.
Okay, great. Thanks, and good morning, maybe just kind of going at the outlook question, a different way, maybe not focusing on the numbers, but if you look out over the next few years.
Given some of the growth you've had in certain regions and end markets.
Where do you see the greatest opportunity is still which regions do you think has a lot more potential over the next few years are there end markets that you see yourself, playing a bigger role than you see it today, just trying to get perspective on after a strong year and golder, partly integrated.
Curious, how you're really focused on over the next few years just beyond just the strategic plan, but just for organic growth.
I understand your question look I think that the.
Our.
<unk> platform is resides in.
Diversity.
And of course in recent quarters in recent years, we've talked a lot about.
The ESG trends and you've talked a lot about our.
Our environmental sector.
But in the background.
There's tremendous opportunities in our other end markets.
Transportation infrastructure is one.
And I remember not so long ago about people being.
A bit.
I am not sure negative is the right word, but a bit negative around the property and building sector, but I have to tell you I mean.
The way we are we have been able to diversify.
Our property and building sector in recent years and tapping in new markets like mission critical I, just talked about the healthcare sector, which is going to continue to grow.
With great strides over the next few years.
I think we our WSI.
As I said before two <unk> uniquely positioned to take advantage of that.
And I think what's so appealing.
About.
The end markets, where we operate this that they are all interconnected.
We are now in a position to bring experts.
Yes.
The Earth environmental sector with our transportation sector with our digital expert providing increased digital services to our clients. We can bring experts in our property and building sector of course in the next few years. If you ask me, where I would like to grow our <unk>.
Additional sectors I think the power.
Sector would be something in demand and for the next 10 years 10 years there'll be an incredible amount of work in that regard.
<unk>, new source of energy to existing grid would be.
That will be a source of incredible work. So so to continue to increase our footprint in that sector is something that I would like to be able to achieve.
And that we can do organically and hopefully we will be able to two two.
To grow it through acquisition as well so.
So there are a number of sectors that we are going to continue to grow in and Ivan.
I haven't discussed the regions, but.
Most of our regions are still to this day subscale.
Despite the in spite the fact that the U K, we have a large business for instance, we can grow our presence in the U K, we can continue to grow our presence in Canada.
In fact without the.
Before the <unk> election.
Kevin Kevin here.
Hello can you hear us.
Hello can you hear me it's Kevin.
Yes, I could hear you I could hear you Alex.
Yes Hello.
Hello.
Okay.
Are you the only one and a fair enough alright.
Alright.
Now with that I am with the.
The team in <unk>.
Speaking okay.
Perfect.
Okay. So anyway look I think.
I see.
Great.
Many opportunities both regionally and end markets and we will update you in due course as we think about that next time.
Okay. Thanks for that I'm not sure what that was in between but.
I guess as you think about maybe if you could just delve a little bit into the property and then building side.
The themes that WSB has historically played on as urbanization, then now you're focused a bit more on the OECD countries.
As you talk to your clients and as you look at the regions globally.
There was some concern early in the pandemic that thats been might moderate but what are you hearing today.
No.
Yes, I just talked about this I think.
I look at our property and building sector.
<unk>.
Right now, it's very strong it's growing margin profile of our high.
And obviously on the commercial side, maybe it's been in the market has cooled off during the pandemic, but certainly in other subsectors like I said before.
Yes.
Yes.
Yes.
<unk>.
The health care sector.
The mission critical work that we do.
We've grown and we've grown at a very fast pace. So so I think this sector is not going anywhere to the contrary I see many opportunities.
And time will tell but I think yes.
We should be optimistic about this sector going forward.
Great. Thanks, very much for that.
Your next question comes from Dmitry <unk>.
From Baird. Please go ahead.
Thanks, a lot.
For taking my question.
I'd like to talk to you about.
Davidson.
Nation and.
Yeah.
<unk>.
A lot of engineering services companies talk about it and I wonder what it really means for you.
<unk>.
Our ability to manage employee costs as well as offer new value added services.
Yes.
So very good question, we will be talking more about this when we unveil our plans in the next cycle, but.
Set shortly.
Digital means a lot of different things for different people, so I'm going to try to.
To explain that very simply.
You need to divide those buckets into the.
The first bucket to me is more of a an inward focus on our on our own business.
Sure.
We are providing the tools to our employees.
To automate and digitalize the services that we're providing to our.
For our clients and doing doing something like that will allow us to be more productive.
To provide a better design.
And along the way, having the ability to hopefully increase our margin profile.
Not because were passing on all of our efficiencies to our clients, but because we're providing a better service and as a result of that we are in a position to charge more for our service.
Because we're providing a more efficient design.
We're allowing our creative design too.
Two.
Two to design assets for our clients our behalf of our clients that are more efficient.
Less costly.
In a world where assets are becoming more complex and complex. The design so that to me that's the first bucket.
It's more of an inward focus on the second one is more of an outward focus on the type of digital services that we are in a position to offer it to our clients in today's world and and the reality is.
We are a consulting firm work trusted advisors, a trusted advisor to our clients. So we're not a software.
Designer.
And we don't have the aspiration to be a software designer what we want to be is that.
The best technology enabler in the marketplace, and we want to be in a position to define that asset today.
With the future needs in mind and in order to achieve that.
Bye.
Operating.
The new technologies into the assets that we are designing today and thinking about the future.
And that's when we.
We start talking about our future ready program. So so in a nutshell to me that that's how you need to think of WSB next few years, we're going to continue.
Internally to become more efficient and optimize our design processes by by using new technology in the marketplace on one end and on the other.
We want to.
To enable technology.
Into the design.
We're completing today.
Rendered.
Our assets more efficient.
Provide.
Or meet all the needs of our local communities. So it's in a nutshell, that's how we're thinking about.
The digital technology and the impact that this is having on our industry.
Got it understood and then.
George you mentioned.
WSB subscale in Canada, and Australia, So I just want to touch base on acquisitions.
Fair enough so acquisition status and I was wondering.
If you can talk more about which regions do you see as most fragmented.
And which regions do you see provide greed dot opportunities.
For consolidation and Florida.
I think many regions are providing many opportunities.
The industry is still consoles fragmented I'm sorry about that.
Some some some places are more consolidated than others. The UK for instance over the years and ask them.
Consolidated very quickly and we have.
No.
A very good position.
The space, but yet there is still some room for us to continue our growth.
In the UK.
Today, the U S market is still very fragmented with a number of smaller sized firms.
Part of our industry and also medium sized firms and larger sized firms. So so this is just the next sample of the spectrum.
Okay.
What we're seeing in the marketplace. So personally I do see some room for us to continue to grow as I stated before in most of our large hubs. So.
You can time acquisitions.
We are going to remain disciplined thats what made us successful.
But in due course, I am confident that.
Both acquisitions will come our way.
And will allow us to grow our presence in those major hubs.
Are there any particular end markets or industry sub segments that you would like to avoid.
No not really I think we like the sectors, where we operate at the moment.
And I have no desire to exit some of the markets, where we operate right now.
Okay got it and then.
Other question is how do you think obviously lease expense currently substantial expense for the company how are you thinking about <unk>.
<unk>.
Given the.
Steve.
Now working remotely and coming to the office part time lets say two times a week three times a week as opposed to five days a week.
I know I remember from prior calls you didn't want to make rash decisions and you wanted to see how everything pans out so I wonder what are your thoughts on that right now.
That hasnt changed.
To be to be totally transparent with you.
Unlike some of our peer group.
We were quite vocal.
About.
The idea of remaining patient.
Around our real estate floor plans, having said all of that in prior calls I said.
That 50%.
Of our leases will expire in the next three years so.
<unk>.
As you can imagine we're very focused on that.
We are.
We are quite dynamic and the way we're thinking about it.
But at the same time.
You need to strike the right balance between creating an exciting working environment.
For your professionals.
Making sure that you preserve your brand, making sure that you do.
<unk> built an incredible culture and at the same time, recognizing that the world has changed and providing more flexibility to our employees.
<unk>.
In some fashion.
Great competitive advantage, so I'm aware of that.
The team is aware of that.
We are keeping this in mind as we are progressing.
But at the moment.
Tell you that.
We have taken a very patient approach to all of this.
And that has actually benefited us as opposed to.
Penalizing us.
So I believe that will continue to follow that track.
In the near term and when we do have.
Our firm position on the subject.
Clearly you're going to become king.
Thank you that's it for me.
Thank you.
Again, if you'd like to ask a question press Star then the number one on your telephone keypad. Your next question comes from Ian Gillies from Stifel. GMP. Please go ahead.
Good morning, everyone.
Morning, Ken.
While I acknowledge the outlook is by and large positive.
Just curious as to whether youre seeing any hesitancy from your private clients due to inflation trends and whether that could potentially end up being a headwind either next year and the year after.
At the end of the day your guess is good as mine, but.
Hi.
Hi.
Our private clients have plans.
And they also have business to run.
Yes.
And.
Real estate developers have returned to generate and and at the end of the day.
It's not the.
That's not what we're hearing right now.
If that makes sense.
What were you hearing theres a lot of positive momentum.
And.
I think the large private clients.
I need to put to work.
There is a lot of cash and the.
And.
And the banks.
And then the low interest rate environment is providing private lines to undertake very exciting projects.
And development opportunities. So it's not what I am hearing at the moment.
To the contrary, but time will tell time will tell.
No that's helpful.
And the other question was going to ask was with respect to the mining business.
The work Youre seeing come about there is there a particular focus.
Whether it be on new mine expansions that are focusing on helping on the maintenance and environment side of existing mines or is it really the whole package.
It's the whole package.
Okay. That's helpful.
Thank you very much I'll turn it back over.
Thank you.
Your next question comes from Michael <unk> from.
From TD Securities. Please go ahead.
Yes.
Thank you good morning.
Good morning, Michael.
First question can you talk about how things are progressing with respect to the colder related cost synergies that you outlined when you announced that acquisition.
Yes, Michael look it's.
Regressing well.
On an annualized basis I see we are on track.
So what we signal to the investment community.
Yes.
Highly confident that we're going to be easy.
Okay. Thank you.
As a follow on to that Alex can you comment on what level of organic growth vehicles business delivered in the third quarter.
It was.
No.
Good double digit growth for the quarter.
And that was the same thing in the prior quarter.
Right. So so continued continued continuous continued momentum continued momentum in the track is very similar.
The previous quarters at the moment so it has been.
Have a good story.
Perfect and then just lastly for me.
Clearly lots of growth potential in the Earth and environmental sector.
Partly related to obviously, an ever increasing focus on climate change and.
Shift to the Green economy, WPS, obviously very well positioned in these areas.
But you did talk about it as clearly being a focus area wondering if there are any specific functional areas within that broader earth and environmental.
Green economy opportunity set that you do.
Do you think you could benefit from adding some expertise in.
We're not at the moment, Michael obviously, given the sheer size sometimes of the acquisition our completing some <unk>, we're not necessarily going to announce it.
But for instance, we have been growing aggressively our climate change team.
In the U S.
Rod.
So so that's an area that we've been quite focused.
So when you talk about rehabilitating sites.
I think we have a very strong position.
And on the studies to planning the strategy.
Like us to continue to increase our position as well. So so we have we have grown our position this year year to date in that regard and we're going to continue to do that.
And but I would say that given the sheer size of our business right now we have like 14000 strong individual in our urban environment sector.
I think we have now.
A very very strong platform to work with.
But we are going to continue to grow it.
The next plan without a doubt.
But this is these are just examples of what we grow.
Through acquisitions and also by by hiring top talent over the course of this year.
Okay. That's helpful. Thanks, Alex.
Thank you.
There are no question at this there are no further questions at this time I will turn the call back over to the presenters for closing remarks.
So this was an absolute pleasure to update you on our Q3 results today.
I would like Q2, I would like to thank you for attending the call and I look forward to updating you.
Alongside deadlines for our Q4 results and strategy next year.
Thank you very much and have a great day.
This concludes today's conference call you may now disconnect.
[music].
The host has ended this call goodbye.
So it was less.