Q4 2021 WSP Global Inc Earnings Call

Well as you know my Danzon Michele good morning, Ladies and gentlemen, do you have a new Ela coffeehouse telephonics and he says you'll just see yet you kept the M C.

It Didnt Xfce's, Jim events here to do this.

Welcome to Ws peaceful Scotia in fiscal 2021 results conference call.

Now I'd like to turn the meeting over to Quentin Weber senior adviser of Investor Relations at <unk>.

Please go ahead Mr Weber.

Good morning, we hope that you're all safe and doing well.

For taking the time to join the call during which we will be discussing our Q4 and fiscal 2021 performance.

For 2022, followed by a Q&A session. This will be followed at 930 a M. By your three hour webcast, where we will present in detail our 2022 'twenty 'twenty for a global strategic action plan and long term vision with US today are on a Sunday, our president and CEO and now let me show our CFO . Please note that this call.

He is also accessible on our website via webcast during.

During the call, we will be making some forward looking statements and actual results could be different from those expressed or implied we undertake no obligation to update or revise any of these statements relevant factors that could cause actual results to differ materially from those forward looking statements are listed in our most recent management discussion and analysis of.

So during the call we may refer to certain non I first measures. These measures are defined in our management discussion and analysis for the year ended December 31, 2021, which can be found on SEDAR and on our website.

Our MD&A also includes reconciliations of non <unk> measures to the most directly comparable <unk> measures.

There's been believes that these non <unk> measures provide useful information to investors regarding the corporation's financial condition and results of our patient as they provide additional key metrics of its performance. These non <unk> measures are not recognized under after is do not have any standardized meaning prescribed under a forest and may differ from similarly named measures as reported by.

Other issuers and accordingly may not be comparable these measures should not be viewed as a substitute for the real estate differential information prepared in accordance with that your ferrous with that I will now turn the call over to Alexandre.

Thank you <unk> and good morning, everyone.

As we gathered today.

I would like to begin by acknowledging the human theory and prices taking place in Ukraine.

We are deeply troubled by the conflict in our talks with.

With all those who are impacted including many of our colleagues who have relatives and other loved ones and the arm joy.

We are closely monitoring the situation in Ukraine, and the sanctions, which have been impulse increase in days.

We can confirm that WSB has no employees or offices in Russia.

Crane and Belarus.

While we have limited number of ongoing assignments and involving projects in Russia, we have decided to exit such assignments for which we have a non material exposure.

Furthermore, we will no longer be pursuing any further assignment in Russia.

Putting these unfortunate events aside I am excited to be here today sharing with you our results for Q4 and 2021.

But also proudly bringing closure to our 2019, 2021 strategic cycle and introducing our future ready 2022 2024 strategic action plan, along with an ambition ambitious I'm sorry long term vision.

That's let me start with our results for which I would like to highlight a key few points.

Or a few key points I should say first the.

The fourth quarter delivered very strong results across all financial metrics organically net revenues grew by almost 10% for the quarter and I were at adjusted EBITDA margin increased by 140 basis point versus 2020.

For the full year, our results are equally strong due to both the strong performance of our platform and the solid contribution of recent acquisitions our.

Our adjusted net earnings per share grew by more than 40% and our balance sheet and cash collection remains strong.

Second.

Market conditions continued to be highly favorable and throughout 'twenty 'twenty. One proposal activity resulted in a record high backlog with an overall organic growth of 10% year over year.

The demand of our core sectors is growing and we are well positioned to leverage those opportunities.

Third.

The addition of Golder has been a great success on all fronts Golar is finishing the year with a strong profitability and an impressive 8% organic growth, making 2021, one of the strongest years in its history.

Integration is nearing completion and we are proud of the great talent that we have well come into the organization as.

As we enter 2022, we are seeing a growing number of collaborative opportunities across our key business lines of transportation and infrastructure urban environment and properties and buildings.

In summary, we cannot have hope for better finish to 2021 capping off a solid year of achievements.

Our efforts to lead by example, and ESG continues to be recognized.

I'm proud to share we recently qualify for inclusion in the S&P sustainability yearbook, a recognition of our strong position in our industry.

We're able to deliver strong rankings and were also awarded an industry mover system. The ability award for recording the strongest improvement in our industry.

Were also recently recognized as a global market, leading provider of ESG and sustainability consulting services and divert dentex Green quadrant, ESG and sustainability consulting 2022 report.

Many S G and sustainability consultancy firms were assessed on their ability to deliver a wide range of ESG services and support their clients in implementing sustainability in their business and we were honored to be named as one of the top ranking companies confirming our position.

At the forefront of our industry.

On the acquisitions front on the acquisitions front, we remain active and most recently added in that policy financial technical and international development expertise expertise to our leading sustainability strategy and resilient infrastructure capabilities through our acquisition of <unk>.

<unk> finance advisor LLC.

Let's now cover a few exciting project wins.

The investment in the clean energy industry scaling up we are in a great position to capitalize on this market and have recently been awarded more than $100 million and work as a direct result of leveraging our global expertise across the entire project life cycle for high voltage.

Direct current power transmission system.

One of these projects supports our high profile of leading edge 11 billion dollar clean passed New York infrastructure program.

When completed this will deliver more than seven 5 million megawatt hours of emission free energy to New York City.

Leveraging our global footprint is also delivering success for our multinational global clients program.

<unk> was recently awarded a project to complete the permitting for 14000 kilometers of cable connecting North and South America for Google.

The cabling will run from the East coast of the U S to Argentina and will be the longest in the world capable of running from a single source or singled power source I should say.

Bringing greater real.

Reliability and bandwidth in South America.

Moreover, we continue to work with the control to Transit Commission as we provide multidisciplinary services for the electrification and charging infrastructure of a bus depot.

This is an integral part of Ptc's drive to Decarbonize their fleets and powered their buses using delete clean energy.

This is a great example of having a direct impact contributing to the green transition.

Before turning to online I would like to take a moment to review a successful 2019, 2021 strategic cycle.

Could the deliberate evolution of our core pillars, and the dedication and resilience of our people.

Im extremely proud to report that we have delivered.

Our 2019 2021 strategic ambitions.

With over $8 billion of net revenues and adjusted EBITDA margin of 16, 8% significantly above our three year target range of 15% to 16% and a strong balance sheet, resulting from robust cash flow generation standing at 175% of cumulative three year.

<unk> net earnings, which provide ample financial flexibility.

Our 2019 2021 success demonstrates the strength of our diversified platform the relevancy of our services to our clients and the strong alignment with market trends driving the world economy.

We now have a robust balance sheet and a healthy backlog that can support growth representing.

We're presenting a solid foundation on which to build our next strategic cycle.

Alain will now review our quarterly financial results.

And where we finished the year in addition to covering our 2022 outlook okay over to you. Thanks.

Thanks, Alex I am very pleased to report on our strong results for the fourth quarter of 2021, driven by record high organic growth solid improvement in adjusted EBITDA margin and stronger cash flow than expected deleveraging further our balance sheet.

For the full year, our results are above expectations, resulting from the combined strong contribution of our platform and our recent acquisition.

Let's now review our results starting with our top line for the fourth quarter revenues and net revenue reached $2 nine and $2 $1 billion up 28.6, and 27, 2%, respectively compared to Q4 2020.

The increase was driven by acquisition growth of 22% as well as overall record high Q4 organic growth of nine 7% our best quarter of the last two strategic cycle with many regions posting low to mid teen organic growth.

Revenue and net revenue for the year reached 10.3, and $7 $9 billion up $16, eight and 14, 7% respectively compared to 2020.

The goal of their acquisition was the main contributor to the acquisition growth in net revenues of 15, 3%, while net revenue organic growth of three 3% was in line with our expectations. We have seen a gradual increase in organic growth throughout the year with H two posting seven point want to.

Percentage of organic growth versus the same period in 2020.

Let's move on to our profitability for the fourth quarter adjusted EBITDA reached $361 million, representing an adjusted EBITDA margin of 16, 8% compared to 15, 5% in Q4 2020. The increases in margin is attributable to the higher margin.

<unk> profile of a recent acquisition.

<unk> focus on productivity and margin improvement initiatives.

For the full year adjusted EBITDA reached $132 billion up 25, 5% compared to $1.05 billion in 2020, adjusted EBITDA exceeded the higher end of our Q3 2021 improved financial outlook range and exceeded the higher end of the range.

<unk> of our original 2021, EBITDA outlook by more than $65 million based on the midpoint.

The fourth for the quarter adjusted net earnings stood at $172 million or $1 46 per share up 85% and 78% respectively from Q4 2020.

The increase in these metrics is mainly attributable to the higher adjusted EBITDA.

For the year, our adjusted net earnings stood at $593 million or $5 90 per share up 50% and 42% respectively from 2020. The increase in these metrics is also mainly attributable to higher adjusted EBITDA.

Backlog as of December 31, 2021 stood at 10 $4 billion, representing 11 eight months of revenue.

Glad to report that our backlog grew organically in each of our reportable segment in 2021, representing an overall organic growth of 10% with $3 $3 billion of order intake in the fourth quarter alone.

The Americas reportable segment was showing a flat organic growth in backlog at the end of Q3 versus December 2020, with the strong order intake in Q4 year over year organic growth in backlog is now standing at seven 6%.

In addition, we are continuing to see significant momentum in the volume of unfunded contract awards, which is showing year over year increase of approximately 70%.

I will now review a few cash flow metrics, our free cash flow in Q4, 2021 was very strong at $370 million, which represents a record high Q4 free cash flow generation free cash flow for the year came at $646 million.

Scenting one four times net earnings cash inflows from operating activities stood at $1 billion at $1.06 billion compared to $1.13 billion. In 2020. The variance is mainly explained by the fact that 'twenty 'twenty benefited from a deferral of income tax and other <unk>.

Image sensors and some jurisdiction.

From a modeling perspective note that Q1 2022 free cash flow will be impacted by the strong collection of the fourth quarter of 2021 and by an additional period of pay compared to Q1, 2021 representing approximately $125 million the situation will reverse in Q.

Two 2022, and do not impact our objective to generate free cash flow above net earnings our days sales outstanding stood at 66 days at the end of 2021 compared to 63 days as of as of the end of 2020 and.

<unk> outperformed our outlook range of 73 to 77 days.

Lastly, our net debt to adjusted EBITDA ratio stood at 0.6 times compared to 0.1 time as of December 31, 2020, mainly due to the acquisition of Golder strong free cash flow in 2021 resulted in a net debt to adjusted EBITDA ratio lower than our <unk>.

Expectations.

During the quarter, we also declare a dividend of 37.5 cents per share for shareholder of record as of December 31, 2021, which was paid on January 17, 2022, with a $55 51, 5% drip participation. The Nash the net cash outlay was 21.

Million dollars let.

Let me now comment on the 2022 financial and operational outlook and assumptions before I do so I'd like to remind you that the outlook for our anticipated 2022 performance is aimed at assisting analysts and shareholders and refining their perspective on our performance and also it has also been prepared.

On foreign exchange rates effective March nine 2022 also please do bear in mind that we have not considered any acquisition disposal of <unk>.

Any other transactions that may occur after todays date.

We anticipate net revenue to be in the eight to five to $8 $75 million range and to post organic growth in net revenue in the 3% to 6% range. Adjusted EBITDA is expected to range between 1.43 and $149 billion.

We also anticipate our quarterly distribution of adjusted EBITDA to be slightly different than prior years in part because Q1 2022 will have one more week than the prior year and Q4 2022 will have one less week than the prior year for a modeling perspective, our press release dated March nine 2022.

<unk> provided the range of adjusted EBITDA by quarter.

Turning to tax we expect that our effective tax rate for fiscal 2022 to be in the range of 25% to 29% and we anticipate net capital expenditures to range between 160 and $180 million. Moreover, we anticipate depreciation of right of use asset property.

And equipment and amortization of software to range between 450, and $470 million amortization of intangible assets related to acquisition is expected to range between 75 and $85 million.

We also anticipate between 50 million and $60 million in acquisition integration and reorganization costs driven by the cost to integrate our recent acquisition.

The Corporation initiated the design and implementation of our global cloud based ERP solution with broad capabilities due to recent development in accounting standard customization and configuration costs can no longer be capitalized and therefore, they will be expense as incurred along with other implementation.

Costs ERP implementation cost for 2022 are expected to range between 45 and $55 million based on the current deployment schedule.

Turning to debt.

Corporation will continue to manage its capital structure to maintain a net debt to adjusted EBITDA ratio between one and two and lastly, we anticipate that at office costs will range between $95 million and $110 million in 2022.

In conclusion.

We are very proud of our accomplishment in 2021, finishing the year with a strong balance sheet, a robust backlog and a workforce that has grown organically by 9% in 2021, we feel ready to tackle opportunities in 2022.

Alex back to you.

Thank you Helane as we enter 2022 of the key markets. We operate in will continue to shape.

Pending.

To shape spending and investment in the future.

All signs point to an increasing demand for high quality engineering and consulting services around the globe.

Many of you will be joining us shortly for virtual Investor day event, where we will fully discuss our plans and expectations for the next three years.

I look forward to sharing more with you later today.

For those unable to participate I would like to provide you with a brief summary of our strategy.

First.

Let me say that in the process of developing our 2022 2024 global strategic plan.

The long term vision for our company became strikingly clear.

As we look through the lens of our diverse stakeholders and given that many of the world's most compelling transformational trends are well aligned with WSB strengths expertise and service offerings.

We believe <unk> is uniquely positioned to create an enduring legacy of greater impact.

As such our long term vision sets our destination for there'll be a speed to be the undisputed leader in our industry.

And puts us on a trajectory with aspiration to double in size.

<unk> sustainable industry, leading organic growth and realize EBITDA margins above 20%.

Our path is clear.

We cannot predict with certainty when we will arrive at this ambitious destination, but I can assure you we will get there.

With this in mind, we develop our 2022 2024 global strategic action plan to set us on a course to advance toward our long term vision.

Three forces drive our organization.

<unk> innovation and technology.

First our plan is underpinned by our unwavering commitment to ESG.

Over the next three years, we intend, notably to make significant progress towards achieving our previously announced 32030 science base Ghd emission reduction targets and to continue to grow our clean revenues to more than half of our business.

As for innovation. This is part of Wsb's DNA, but simply we innovate because the world doesn't stand still.

There's never been a greater opportunity for imperative or imperative I'm, sorry to enable resilience.

When it comes to technology, we bring a digital mindset to every project with the objective of leveraging creative digital solutions to create efficiencies in our business and augment the value of clients assets.

Beyond the accelerators the core of our plan is to continue the evolution of our four pillars.

People and culture clients expertise and operational excellence.

If I can summarize our strategic action plan.

And for World of.

Words, I'm, sorry that encapsulate.

What are what we are aiming to achieve it would be.

Foster.

Lead elevate and transform.

Over the next three years, we will continue to create.

Value for our stakeholders by evolving our foundational pillars.

Two first foster the ingenuity of our people.

<unk> to lead through technical excellence and expertise.

Start to elevate the standards and client experience and drive leading performance and efficiency.

True lastly, the transformation.

Of our company to leverage the scale of our our organization and we will make key investments in our business practices technology and workplace to further it further increasing our agility and capacity to capture market opportunities.

As for our financial ambitions over the next three years, we aspire to grow significantly through a robust organic growth and the disciplined acquisition strategy, while delivering delivering improved margin profile.

Bringing us one step closer to our long term vision.

Like 'twenty 'twenty four we intend to grow net revenues in excess of 30% adjusted.

Adjusted EBITDA by 40% and adjusted net earnings per share by 50%.

These were some highlights of our strategic action plan that will be soon covered in greater detail.

Our 930 eastern call Eastern time call.

For our Investor day.

On a final note I would like to sincerely. Thank our employees our board of directors as well as our clients and shareholders for their continued support.

I would now like to open the line for questions.

As a reminder, if you would like to ask a question. Please press star one on your keypad and SEC Counsel you have a question compressor case that star one to ask a question.

Well, our policy and kitchen, the FTC like two <unk>.

So as of today Claudia telephonic.

<unk>.

Our first question today is from the line of Jacob bout from CIBC. Please go ahead. Your line is open right now if we would have thought.

Good morning.

Although the first questions here good morning.

First question is just on organic growth.

It appears to be accelerating here up 4% in Q3, 10% Q4.

But your guidance is for 2022, 3% to 6% appears conservative with.

Was that just a function of tougher comps in the back half of the year.

How should we be thinking about the shaping of organic growth from 2022.

No.

I disagree Jacob I think I don't think it's conservative.

Just the <unk>.

Fact that globally and given the project mix and in our our geographical footprint.

Q3, and Q4 tend to be our strongest quarter quarters, whereas Q1, and Q2 tend to be.

Perhaps.

From a seasonality point of view.

Perhaps the quarters that are not contributing as much to the total.

To the total.

Net revenue of the company on an annual basis.

That is highlighted in the outlook that we provided then you look at the seasonality in the adjusted EBITDA fluctuation.

Q1, and Q2 are actually.

Smaller quarters than the last two so.

So I think on a on a 12 years basis. We are we are 12 months basis, I'm, sorry, I'm comfortable with.

With the outlook that we provided.

Okay.

And then.

Yes.

The guidance implies margin expansion in 2022.

There's a lot of moving parts, there, but how do we reconcile that with some of the factors like wage inflation higher discretionary spend as we come out of the pandemic cost of reopening that type of thing.

Yeah, well all of the above is factored in so.

<unk> inflation as you described it is factored in our margin improvement.

In previous calls we had mentioned we had made.

Some some decision throughout the year this year to make adjustments in our business.

To deal with with wage inflation.

We're going to continue to be extremely proactive with with this.

But I am comfortable that despite.

The wage inflation.

We are going to be able to increase our margin profile going into 2022.

Okay, and how does mix play interval.

I'm, sorry, I missed the question Jacob.

And how does mix play into that.

The mix.

Yes.

Well the mix I think.

Going into 'twenty to 'twenty, two we you look at our backlog at the moment and across the batch in Q4, our backlog grew double digit in every single region, where we operate so I'd say that the <unk>.

Now all of our regions.

Pulling in the same direction. So I think this is positive.

And that's why I'm comfortable going into 2022 that we have the right project mix and the right.

Footprint, if that makes sense.

Okay.

Alright, thanks for that Alex I'll save my questions on the strategic outlook for later on today.

Thank you so much.

Thank you. The next question is from the line of Jesse <unk> from Raymond James. Please go ahead.

Hi, good morning, everybody.

It was really great to see organic.

Okay.

It was great to see organic revenue and backlog grow the way they did in Q4.

Which sets you up nicely for this year.

I am going to try to.

Ask one question about your new strategic plan, it's it's really what stood out for me are the.

It is really the 20% margin goal you set out for the long term.

And also the gains you believe you can make on an annual basis I think it was 30 to 50 basis point I'm not sure if that's what's implied for 2022, but.

How do you what lever I mean, we've talked about inflation and all of that all of that stuff, but what levers can you pull to get you there with one of the big buckets, where you're going to pull from to.

Continuing to improve margins.

There are a number of.

Points.

The number of leavers Frederick.

Allowing us to increase our margin profile.

We don't talk enough about this but the expertise that we bring to the table.

Over the years I mean, we had invested in a lot of.

Smart hires organically.

Organically.

Whitten WSB, we are talking about two M&A strategy one is.

Companies and firms that are joining our platform, but also.

Our M&A strategy around our talent acquisition.

And that over the years, we've we've hired.

Credible talent and leaders to the farm.

That this is just raising the bar from that point of view I think we've hired.

A lot of.

Great Rainmakers, having credible relationship with clients just take an example, our head of federal in the U S.

<unk>, who joined us less than 18 months ago, we didn't have.

A person like that before it used to be the CEO of the Army Corp of engineer.

<unk>, great relationships, great Knowhow and has been able to very quickly assembled a very great team. So that obviously is playing into the services that we can offer the expertise that we can offer and the price holes. So that we cannot charge for for the services that we are offering.

Our margin profile for the big improvement is not about cost cutting.

It's about.

Increasing.

The quality.

The quality of services that we are frame and a result, and as a result of this we are in a position to charge more for our services number one number two.

We are at the moment flying the plane and changing the engine at the same time, meaning that we continue to transform the organization and we have been doing that for many years in a row now.

Just look at our project delivery initiatives.

Clearly you know our margin erosion is reduced and is reducing year over year. So what that means is we are becoming more efficient in delivering project.

And Thats two reason one is we.

We want to hire and attract the best talent in the industry number one two we are investing in technology to provide our professionals with the best tool.

And I think.

Digital is also playing a big role.

And to the margin improvement of our business. So I could go on and on like this and talk to you about tenant or levers, but we have a real game plan about this and then if I mention that.

We are now seeing the path to 20% EBITDA business, it's because I believe in it.

That's a great answer and I think that's really a reflection of your.

Continued transition movement too.

Professionalize affirm and continue to them.

It hit the high watermarks there.

The other one I would want to just dig into is the ERP system that you started implementing how how long of a process do you think.

That will taken are there.

Regions that are being transformed more radically than perhaps others. How are you going about it.

Yes.

I'll take that one so the ERP.

First of all it's a journey so we've kicked off the kick off the project.

In early September .

So we're moving to.

Our global ERP across the organization. It's the first part the first journey is Canada. So we'll go.

We will go one step at a time, we will not try to.

Convert every single country, we run in one shot so.

A prudent approach to this conversion.

So amazing that we were talking about margin improvement.

ERP alone, yes does the implementation effort, but there's also efficiency that will come from it increase insight on the business better access to data. So that's the beginning of the journey Fred on that front, starting with Canada in 2022 and beyond.

Okay. Thanks for the color I'll talk later thank.

Thank you Eric.

Thank you. The next question is from the line if you re link from Canaccord Genuity. Please go ahead.

Good morning.

Alex we saw a notable uptick in new awards in the fourth quarter wondering if you could share your thoughts on how the macro situation has evolved over the last six to nine months.

Yes.

The way I the way I would put it.

Sure.

But it's simply urea is.

I, obviously feel better going into 2022.

And I was feeling when we went into 2021.

If you put things in perspective.

And in making that.

Analogy again.

Our plane analogy again, I think last year, when we went into between 'twenty, one I feel and felt we were flying pretty blind.

We're now.

I think we are going into 2022 with our eyes wide open and we see clearly there's not a whole lot of fog ahead.

And I think what you've seen in Q4 is for instance in the U S. The conversion.

Our soft backlog into hard backlog.

And Thats a great concert I.

I feel quarter over quarter, I was telling you well our soft backlog is growing and our proposal activity is growing and the proposal activity level has never been so good then.

But.

At the same time I Couldnt tell you that that proposal activity level west converting into hard backlog.

And the Green light to start billing hours on that backlog. So, but then Q4, what we have seen is perhaps the beginning of that conversion of backlog into now hard backlog.

How this will play out in 2022 I hope that this will continue.

I don't expect the U S infrastructure build to play much into 2023.

I think 2022, I'm, sorry, Yuri I think it's more between 23 event. However, given the sheer size of soft backlog that we were able to win and assemble in 2021.

Fact that we are seeing this converting into hard now.

But this was really positive and thats, a great way to start the year.

Okay. Thanks for the color so far.

So to be more specific on your on the answer from a macro point of view.

What I felt was quite comforting is as I said before I think during my address my another question that I answered.

All of our regions.

<unk> showed double digit organic growth in Q4, and the backlog. So that was good that it's not just one country or one region that this pulling.

The company at the moment.

Okay. That's helpful. Maybe just shifting a little bit to your to your outlook.

I don't know if it's if I'm nitpicking, but it seemed to me in the past the M&A featured a little bit more prominently in your in your past strategic.

Plans, where you would sometimes.

You know put head count goals and stuff like that in the in the slide deck not no mention of that.

So just wondering if if you anticipate being as acquisitive.

During the next cycle as you were in the past.

Yes.

I'll answer that very clearly the last part of your question and I'll answer the first part.

The answer is absolutely.

There is absolutely no reason why we shouldnt be as active and hopefully more active.

Then in the past I think the pipeline is healthy.

I think we see a lot of opportunities I think.

Market volatility and uncertainty will bring.

And we'll provide up opportunity for <unk> I think you know my view on this.

In my mind, whether the market is sound and good or whether the market this stuff and challenging.

As always opportunity for us to be opportunistic.

We have delivered the balance sheet much quicker than we were all anticipating we're not <unk> five times EBITDA. So we've already almost de levered entirely the golder acquisition. So so we have every intention to be active on the acquisition front. So I hope I made.

That clear up but the reason why didn't talk about head count than the last plan.

Yuri it's because I haven't been able to deliver.

The head count that we had if there is one metric in each and every plan that we rolled out the last planned in the plan before is we have not been able to delivered.

The head count.

So.

Trying to forecast head counts when I look back at the last two plans that I have not been able to delivered.

I thought that this was not a wise thing to do and I ask myself why we have not delivered the head count and this plan in last land and frankly I think it's good news I think we are now if you look at the fee revenue that we are generating per employee.

Over the last two to three plans if I go back all the way back to 2012 to our 2015 plan and then our <unk> plan to our 18 planned $1 18 to 2021, you see a constant increase a fee of increased fee revenue generated per employee per FTE.

So consistently over the last decade.

We have been doing a lot more with a lot less.

And I'm, saying that in a very respectful way to our professionals.

We are in a position now per FTE to do and generate a lot more few revenue per employees and I think it's.

The reason being that we are able to an earlier question that I answered we are able to charge more for our services.

Per employee.

We are able to generate more EBITDA per employee.

We are able to leverage technology to our advantage.

And we are more efficient along the way. So so I moved away and this plan from head count I would continue to signal the head count that we will be acquiring.

As we are completing more acquisitions Yuri.

To you to assist you.

But I felt it important to strike the right balance between head count growth did.

<unk> investment.

And margin and organic growth improvement.

That's the reason why you see a small nuance in the plan.

Very good I appreciate the color and I'll turn it over there.

Okay. Thank you.

Thank you. The next question is from the line of Michael <unk> from TD Securities. Please go ahead.

And thank you and good morning.

Hello, Michael.

Hi, Alex.

The first question is another question a follow up on the margin improvement that you are forecasting or guiding to for 2022.

I'm wondering if you can comment on whether or not there are any particular regions that are expected to play a greater role than others in terms of driving the margin improvement you expect in 2022.

Look Michael it's <unk>.

Going to be a fairly boring answer, but we've gone through next tensive.

Strategic.

Process review with each and every country in the group.

And when I mean every country I mean every country and.

We're not.

Factoring any margin reduction in any of our countries at the moment.

So we are actually all pulling in the same directions.

We feel as an organization that we can do better.

And I think I signaled that to you in the past.

ICF bad for us to do better.

Every but everybody within the organization is pulling in the same direction and today, if you do a 10.

Intent to participate into our or listened to our Investor day, you will hear from most of our.

Of our leaders, leading our biggest regions and they were all call for margin improvement, so, but I'd say that the margin improvement effort is a global effort not just one effort by by one individual or one country.

So we're all pulling in the same direction.

Okay fair enough.

You were asked about inflationary pressures earlier in the call Alex I'm wondering if you can comment a little bit more specifically on on what Youre actually seeing in terms of inflationary pressures within the business.

Any more specific detail that you can provide.

And then I'm also wondering about.

What that means as far as what youre seeing in terms of billing rates across the broader engineering consulting industry view of.

Just general inflationary pressures.

Or is that a broad based.

Well, it's a very good question.

I mentioned before that we are very proactive on that point.

Investing in our people is always top of agenda for us so over the course of 2021.

We were not afraid to make adjustments as we see fit.

As we saw fit I should say and meaning that.

Even though we have annual salary review processes.

Didn't want to wait a year.

To adjust their platform so and.

I think thats.

No.

That's a testament of our agility and flexibility.

Along the way in 2021, we've made and decided to make adjustment in some countries to reflect that the workforce and the market dynamics, where we're evolving very rapidly and I am not going to be afraid to do the same in 2022.

The good news is that.

This is not justice wsb's centric.

Matter I think it's felt.

And the industry, it's felt by our clients.

There are external forces.

Outside of our industry impacting our business the cost of construction have gone up as well.

As a result of it so so I think it's fair to say that.

<unk>.

We are also in a position.

To to work with our clients also to share the burden on this so im feeling comfortable Michael that.

Given the relationship that we have with our client base.

Given that the visibility that we have going into 2022 that that we are in a position to manage.

The inflation.

And we are in a position we have enough visibility ahead.

Two.

If you look at those.

That pressure and be able to deal with it.

Okay.

Very helpful. Thank you and maybe just one follow on to that Alex when we look at the 3% to 6% organic growth guidance you provided for 2022.

What extent is that range.

Really reflect increased volumes of work.

Versus actually factoring in an assumption around higher pricing for your services or with the higher pricing.

If that happens be over and above this 2% to 6%.

Well I think it's factoring.

Everything you just described I think we were looking at this backlog.

Some some of that backlog is short term some of that backlog that was awarded as longer term beyond going above 2022.

So.

I'm feeling comfortable looking ahead with what we know today that the 4% to 6%.

It is a good and appropriate forecast for 2022.

Given the seasonality that.

We will experience in Q1, Q2, Q3 and Q4 so.

And as in the past if we feel that we need to adjust the outlook. We will in 2021, Michael we adjusted our outlook twice.

Of course.

I don't intend to adjust our outlook twice every year for the next three years, that's not what I am telling you last year as I said, we were going into 2021.

Fairly blind.

So, but this time around I feel we have enough visibility and I'm feeling good about the four to two 6%.

The power of WSB is our diversity and diversification.

So you never going to see.

Massive spike.

Inorganic growth, but at the same time I'd be surprised if you'd see massive downward pressure.

Unless all of our countries are going through a very difficult time all at once so.

So that 4% to 6% is the number that I'm feeling good about.

Okay. Thank you for the answers.

Thank you. The next question is from the line of Dmitry <unk> Melnick from <unk>. Please go ahead.

Yeah.

Good morning, and thanks to look for taking my call.

So I'd like to ask a question about the 200 basis points margin improvement improvement over the next three years can you.

Uh huh.

Provide the key drivers for that margin improvement by the order of magnitude.

In terms of most important.

Okay.

And so on then done less important.

You mean country by country, our 55 countries.

No no no I mean, the overall, so yes that would be too long of a question.

So the 30 to 50 basis points per year improvement over the next three years.

I guess what are the.

Reasons driving it in terms of number one most important number two most important et cetera.

Yeah.

I believe.

Clearly the optimization of our company.

Got that.

The project delivery initiatives that we have underway within the company as one very important one.

I.

That's the most important one I mentioned that earlier on was the.

The talent that we bring to the table and the.

The price that we are able to charge for our services.

If I look back.

Where we were a decade ago were already in 2022 and I look back at.

The <unk> acquisition in 2012 today. This year is going to be the 10th year anniversary of our acquisition of WSB in.

And I look at.

The expertise that we are that we have been able to add to our existing platform has been extraordinary in the last decade.

And clearly there's a benefit to that too we have been able to be more upstream with our clients.

We have been able to increase.

The price that we're charging for our services and frankly, our clients are please to be paying that price because I believe.

They are getting a great service and that.

Adapt as proven by the free cash flow that we are able to convert.

On an annual basis as a percentage of our earnings per share we have been consistently able to reduce.

The time between we entered the our invoice and the time between we collect that cash.

This is the best satisfaction survey that you can think of.

One of your clients are paying you quickly is because they are happy to pay you and they are satisfied with the service that you are rendering so so I think.

The expertise that we have been able to assemble and this platform is great.

And I expect this to continue.

And as I said before we are we continue to transform the organization in such a way that we are now seeing.

And we continue to see margin improvement if we do this well and Thats why.

Our long term vision calls for 20% EBITDA margin, if we do this right and we execute right in the next few years.

I am confident that one day, we can get there.

Got it okay. Thank you and the next question is.

Can you describe what are the concrete benefits.

The ERP system would provide to them.

The USP that you don't have today or that could be improved in terms of perhaps leaning more work increasing efficiencies internally of project execution. If you could spell out those key.

Concrete things that would be helpful.

But let me just say that.

To start with we already have a great platform.

We are already feel that we have.

Yes.

A great organization from an operational excellence point of view.

But.

If we want to continue to raise the bar and continue to challenge the status just status quo in the organization. We also have to continue to invest in technology, and we need to continue to invest into the company and our people.

So the.

The reason why we are doing this is it's part of the journey of WSB, we wish to continue to build more commonality to continue to leverage best practices and.

An example of that will be global collaboration with our global clients I talked about in my address I talked about.

Project that we will be doing for Google.

We now know American and South American team.

Providing and leveraging the platform by having global technical tools to better work together.

It has to be part of our equation in our strategy.

And that's why we feel that.

Investing even more in the company will bring fruits and will bring some some benefits to the business. So so we think the timing is right.

We think that.

We are at the time and the place and.

In our company.

To do this and I'm confident that we have the team to deliver it.

And so the ERP for example, using your Google example, if I can explore that further would that enable you to better.

Information between WSB and.

Your clients.

A.

A lot of data sharing between the real time.

On the same platform.

Absolutely, especially as it relates to project delivery.

Tap dashboard that we will be able to share amongst ourselves, but also with our clients will be important.

And actually.

We are using more and more technology to exchange information with our clients and therefore.

Yes.

The continued investment.

And technology in our firm has to us.

Not an option or requirements so.

So absolutely.

Thank you and there are no further questions at this time, so I'll hand, the call back to Alexandra for some closing remarks, Apple a pass on this year.

Well. Thank you very much for attending this call and I look forward to hopefully hearing from you in 30 minutes or three hour and a half at Investor day.

So we'll be talking soon thank you very much.

Talk to you later.

Thank you. This does conclude the conference for today. Thank you for participating and you may now disconnect your lines at Enzo Mr. Joseph <unk>, Mr. Contactless Telephonic Jojo tweet Max depot for co participation ever provide months, Hi Crush Inc.

Okay.

Okay.

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Okay.

Great.

Thanks.

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Yes.

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Yes.

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