Q3 2022 WSP Global Inc Earnings Call

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

Okay.

Okay.

Yeah.

Sure Good morning, ladies and gentlemen, do you have any other coffeehouse telephonics any others is definitely not huge it was empty nester linked gel system. You'll then two did you play the SP welcome to double U S piece of third quarter 2022 results Conference call I would now like to turn the meeting over.

But you called out with all Investor Relations. Please go ahead Mr. Weber.

Good morning, Basel, we hope that you're all doing well and thank you for joining our call today, we will be discussing our Q3 2022 performance followed by a Q&A session. Joining us today are Alex <unk>, our president and CEO and now let me show our CFO . Please note that this call is also accessible on our website you guys got to be out west.

Yes.

The call, we will be making some forward looking statements actual results could differ 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 MD&A for the year ended December 31st 2021.

During the call we may refer to certain non <unk> measures. These measures are defined in our MD&A for an acquirer that ended October one 2022, which can be found on SEDAR and on our website.

A M D and it also includes reconciliations of non <unk> measures to the most directly comparable GAAP measure.

Management believes that these measures provide useful information to investors regarding the corporation's financial condition and results of operation that could provide additional key metrics of its performance. These non <unk> measures are not recognized on the rest of our S. E T.

Do not have any standardized meaning prescribed under IRS and made it very much from a 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 related financial information prepared in accordance with <unk>.

I will now turn the call over to Alexander.

Thank you <unk>.

And good morning, everyone.

During the third quarter of 2022, we continued to build on the momentum we experienced in the first half of the year. In addition to closing significant transactions.

As a result, we will come over 7300, new employees from recent acquisitions.

Meaning our presence in key markets and geographies.

Organically, we also increased.

Our <unk> count by 3000, 202022, demonstrating the strength of our brand as we recruit new talent.

Organically.

In total we have grown our workforce by 10500 people in 2022, all while successfully delivering on our projects and being focused on our markets and our performance.

I'm going to kick off this call by touching on three key highlights first our third quarter results are slightly ahead of our expectations. We achieved solid organic net revenue growth across all our segments and improvements in adjusted EBITDA and adjusted net earnings in addition to maintaining a very.

Healthy backlogs.

Second.

As just mentioned since June of this year, we closed six acquisition, including.

Yeah, Eli business of John Wood group, our largest transaction this year.

Integration of these businesses.

Are underway and progressing as planned.

Lastly, we successfully completed in August and equity offering of 920 million Canadian dollars, providing us with a solid balance sheet going into 2023.

To set some structure for this call I'm going to expand on some of our recent achievements and then I will cover our financial performance.

Beginning with recent acquisitions with Eni has now officially close and the integration is progressing as planned.

We are already benefiting from the collaboration between businesses and seizing opportunities across various markets.

For example, our team is working together in an offshore wind project in the state of New York.

Combining a strong brand in offshore wind, but did that skill set and solid client relationship.

This has translated into very robust client offering.

We're also making key nomination from our recent acquisitions, including the appointment of Joe Circle West President of our urgent environment business in the USA, representing more than 6000 employees.

Joe was previously the CEO of the global consulting business units of the John would rule, which was mainly composed of the Eni business. We just acquired.

In September we also closed the previously announced acquisition of capita Ari and.

NGL earn.

The two businesses are now being integrated into our UK platform, adding depth and expertise to our advisory engineered engineering business across the country.

Emerging success stories include stepping into support.

One another current projects aligning our opportunities in combining forces to a new work.

In a bid for an academic project Rei is now supporting Wsb's consortium enhancing the strength of our beds.

Our recent acquisition include Green Green cap in Australia, Madrid, based Vod, and <unk> engineering and the U S.

These acquisitions support our regional and global ambitions by reinforcing our service offerings in key sectors and strengthening our presence in key geographies.

Our M&A activity demonstrate our opportunistic and disciplined approach to acquisition and we do not foresee the future to be any different.

We will continue to allocate our capital in accordance with our strategic plan with a view to maximize shareholder value.

Now moving to our recent industry awards and recognitions.

Starting with Anr rankings WSB took the number one position in Anr magazine's 2022 list of the top 225 international design firms for the second consecutive year.

We also achieved leading position in transportation buildings power and water as largest waste and manufacturing.

We're also trilled to have one to two environmental analysts sustainability consulting awards.

These awards recognize our leadership role in sustainability and resilience.

Additionally, the acquisition of Eni has enabled us to strengthen our market position and take the lead and environment analyst top 100, environmental and sustainability consulting consultancy firms for 2022.

In our quest to become the undisputed leader in our industry. These recognitions demonstrate wsb's continued focus on achieving its strategic ambitions.

On the topic of ESG, we continue to enforce our leadership and commitment.

In 2021, WSB committed to reaching net zero by 2040 across the value chain.

<unk> bye greenhouse gas emissions reductions targets approved by the science based target initiative.

Just at the end of last month, we received official approval for a net zero target under the SPP and use net zero standard.

We are proud to be among the leading companies to receive district cognition.

To support our climate commitments, we recently launched.

I am sorry, our client climate transition plan, a crucial element of our journey to reduce <unk> emissions as it set out concrete action.

Having a solid action plans to decarbonize our own active.

These all to drive growth with our clients, including helping them on their own de carbonization journeys.

At this moment WSB experts have joined world leaders and industry professionals to accelerate climate climate action and find solutions to the world's environmental and social challenges at the 27th annual.

Climate change conference known as scope.

27.

And December WSB will actively contribute the cop 15 conference in Montreal Cop 15, we'll look at the implementation of protocols of the convention on biodiversity.

We're honored to share the influence WSB has underway to reduce negative impacts on our planet.

And more announcements are to come in that regard.

Transitioning over to our recent wins I would like to highlight two notable projects.

<unk> and its partners were recently awarded the opportunity to completely redesign New York's Penn station.

The project involves providing a preliminary design for the long awaited transformation of the station.

Creating a world class transportation facility that will.

<unk> overcrowding.

Our relief I'm, so sorry, overcrowding improve safety and deliver rider focused trends with experience.

This project will reshape Penn station into a single level facility centered around our ground and ground train hall with the 450 foot along sky lit.

<unk> between Madison Square Garden, and two Penn Plaza.

It will benefit from deep collaboration across our transportation buildings and advisory business lines.

And the second project is for Boeing.

<unk> was selected to provide environmental health and safety services as well as sustainability related due diligence activities for various Boeing sites across the world.

This project is a great example of an opportunity to leverage our global platform and also allow us to expand from national or international contracts, increasing our portfolio enormously.

<unk> was able to emphasize its long lengths.

Long standing relationship with Boeing and that subsequent familiarity with company's systems.

<unk> significant time and cost benefits from Boeing for Boeing.

And the U S. We continued to be well positioned to win work through the ongoing stimulus plan.

<unk> funding for highway transit.

Energy and water projects among others.

Are being deployed.

The benefits for <unk> will play out over several years and May not peak until 2025.

We could expect a positive impact in early 2023.

Three due to the timing of awards for the programs continuing through the year, but the situation remains fluid.

I'll pass it to align to review our financial results in greater detail, Let me say that I'm very proud of our performance. We had another good quarter with great achievements on many fronts, including our recent reduction in turnover and continued success at increasing our head count to support our growth journey.

Despite a tight labor market on that note I'll hand over to you.

Thanks, Alex and Hello, everyone I'm very pleased this morning to report on our results for the third quarter.

So let me start with top line, so far to third quarter revenues and net revenues reached $2 9 billion and $2 2 billion, respectively up nine 8% compared to Q3 2021.

The quarter's solid net revenue organic growth of 8% was powered by all our regions led by Canada.

Australia and the UK.

Backlog as of the end of Q3 stood at $13 3 billion.

Which is equivalent to 12 three months of revenues in the nine months and 12 months period that ended October one our backlog grew organically across all regions by 11% and 15% respectively. We are monitoring our backlog closely and our client continues to be committed to their pro.

And our pipeline of opportunities remains healthy.

Moving on to profitability adjusted EBITDA reached $407 million up 8% compared to the same period in 2021, adjusted EBITDA margin for the quarter reached 18, 6% stable versus Q3 2021.

Adjusted net earnings for the quarter stood at $193 million or $1 59 per share up approximately $14 million.06 per share respectively compared to Q3 2021 the.

The respective increases and these metrics are mainly attributable to higher adjusted EBITDA.

Let me now take a few moments to highlight key points on our free cash flow.

For Q3, 2022 free cash flow stood at $37 million. The main contributor to divert the variation versus Q3 2021 is an additional period of payroll in 2022 versus 2021, representing an outflow of approximately 125.

$5 million.

This situation will reverse in the fourth quarter of 2022.

Year to date in addition to the payroll impact our free cash flow was also influenced by increased tax payment due to a recent change in tax regulation in the U S, which delays the deductibility of R&D expenses. This represent approximately 100 million dollar of additional cash.

Tax in 2022.

In addition, and as expected we are observing a continued normalization of our DSO to pre pandemic level since the beginning of the year. Our DSO has increased from 66 days to 75 days in line with our 2022 annual target range from a.

To link perspective, each day of DSO represent approximately $30 million of free cash flow and as a reminder, Q4 is typically our strongest quarter of cash collection.

Finally, when excluding the impact of changes in tax regulation in the U S. We are still targeting to convert approximately 100% of our net earnings into free cash flow.

As of October one 2022, the net debt to adjusted EBITDA ratio stood at 1.8, incorporating a full 12 months of estimated adjusted EBITDA of all recently acquired businesses. We expect this ratio to range between one four and one five.

As of December 31, 2022.

During the quarter WSB declared a dividend of <unk> 37, five per share for shareholders on record as of September 32022.

This dividend was paid on October 17, and with a 49, 1% drip participation. The net cash outlay reached $23 7 million.

On financial outlook for 2022 issued in Q4 2021 press release is adjusted with increased net revenues now expected to range between eight eight and $8 $9 billion.

And an increased adjusted EBITDA now expected to range between 151 and $153 billion.

So acquisition integration and reorganization costs are now expected to range between 80 and $90 million due to our recent M&A activities.

Lastly, we would like to remind you that Q4 2022, we will have fewer billable days than in Q4, 2021, which will offset the additional billable days. We had in Q1 2022 versus Q1 2021 on that back to you Alex.

Thank you and I will conclude by stating that I am very proud of our performance in the third quarter, which reflects continued momentum across our business and strong execution by our team.

Considering this momentum and our solid balance sheets, providing both agility and resiliency, we are increasing our financial outlook and we are moving into the year's final stretched with confidence and a continued focus on executing on our plan with discipline.

We look forward to updating you on our 2022 operating plan in Q4.

With that we will now proceed to the Q&A session. Thank you.

Thank you as a reminder to ask a question you will need to slowly press star One and then one on your telephone and with via name to be announced once again, it's still one and then one on your telephone and wait for your name to be announced.

We are now going to take our first question.

Our questions come from the line of Jacob <unk> from CIBC. Please ask your question.

Good morning.

Hey, Jacob.

Maybe just start off.

Just talking about if you could provide a bit of commentary on lessons learned from this rps experience.

Does this set a new precedent going forward, especially as you think about future M&A in cigarettes in the environment or water targets.

Im not sure its a precedent because.

That's half thing time, and time again around and across around the world that Jacob and it's the second time that.

We've experienced something like that that <unk> will remember in 2016, there was a counter bid on this on the Sweet group.

An acquisition for which I had made an offer and <unk> decided not to.

To pursue the opportunity.

The reality Jacob is that we are on.

When it comes down to two acquisition and to our Strat plan.

We're very disciplined.

And we're not going to move away.

From from our set goals and our plans.

If we hadn't made the software into first place is because we believe this company was was valued properly at that time.

And we were not prepared to change our view in that regard.

Okay and then my second question here is.

Around revenue growth going into 2023, given the strong organic growth that youre seeing this record backlog.

Is there any reason that this type of revenue growth Shouldnt organic revenue growth shouldn't continue into 2023, and then maybe just comment on.

Are you seeing any change in client behavior.

At all.

Either given your inflationary pressures that are at risk of recession.

Let me let me answer the first part of your of your question first and foremost we're.

We're going into 2023, and we're still very much committed to the.

Financial ambitions that we have unveil.

In February our three year plan.

Which means that I can tell you I'm not sure I'm going to announce anything special here, but we're clearly.

Forecasting organic growth next year.

So so I think we're going into 2023.

Feeling good given the year that we've had in 2022.

But I think at the same time.

Sure.

We need to be in touch with our local markets.

Need to be focused on our local markets and and.

And things could change fairly rapidly.

Are we seeing.

Postal activity level going down at the moment no.

Are we seeing.

Winning more than our share of work at the moment, yes.

How are we feeling good about the backlog.

That we have.

Absolutely.

We're very pleased about that.

But obviously.

When you are faced with the potential recession, you've got to be.

Cautious about it and you have to be.

You have to be in touch as I said before with your local markets. So so we are going to monitor in 2023, but for now.

I can tell you that.

We're performing very well.

And there is a lot of activity going on at the moment.

Great. Thank you.

Thank you so much.

Once again, if you wish to ask a question. Please press star one and then one on your telephone and wait for your name to be announced once again, it's still one and then one on your telephone.

Going to proceed with the next question.

The question has come from the line of Jonathan Lamers from obesity care with these please ask your question.

Good morning.

Good morning, Jonathan.

If I could ask the organic growth question a different way.

Year to date, the organic growth has been well above the initial guidance that was provided in March could.

Could you comment on.

Where it has been stronger versus your forecast.

If you could comment on inflation and volume that would be helpful.

Yes, I could take that one Jonathan.

So so the first comment I would make just be careful when you look at year to date results on growth needs.

I need to remind ourselves that our Q1, if you remember we had a.

Additional billable days, so when you normalize that.

Your growth of 8% that we see year to date is coming down by about two four.

Percentage points, so about 6% which is.

On the higher end of our range that we have announced in March so.

For us the performance that you see thus far is.

Reflective of.

Higher end of the range performance, we were planning at the beginning of the year.

And I think our land indicated this in his address I think in Q4, we will have.

Sure.

All days.

When you look at our outlook.

On an annual basis.

It's going to fall within the disclose outlook, we're confident that's going to fall into the disclose outlook. Our revised outlook that we provided you with today.

But at the same time there is a recognition that this is going to be in the higher end of the range of the outlook.

So in some fashion we are.

Obviously very pleased with the way the year has been has been going on for us.

Okay. Thanks for your comments.

Thank you Jonathan.

Once again, ladies and gentlemen, if you do have any questions I'll comment. Please press star one and then one on your telephone and wait for your name to be announced.

Once again, it's still one and then one on your telephone.

We are now going to proceed with our next question.

Our next question comes from the line of Ian Gillies from Stifel. Please ask a question.

Good morning, everyone.

Good morning, Good morning Ann.

This is a bit of an out of the box question.

<unk> has obviously been a challenge and acquiring talent and adding talent has obviously been a key focus for some time when.

When I look across the landscape of these tech companies in engineering engineering companies doing layoffs.

Do you see any opportunity to add any of those people into the fold for the work that you do or the I guess the core competencies just two different and.

Does it create any sort of opportunity for automation within your business or things of that nature.

Look.

I'm not sure that this is well known but by our investment committee, but by the investment community but.

W. B.

It's not just and there's nothing wrong with that by the way, but it is not.

No longer just an engineering firm.

And that's why we're talking about being a consulting firm I think we today our workforce. It's one of the most diverse workforce that you could find in our management consulting business, we have economists.

We have financial analysts who have biologists.

We have scientists we have experts.

We have engineers we have.

So.

So of course.

We are taking advantage of what's going on in the workforce and the labor market and more importantly, we are taking advantage of our brand.

To attract.

The smartest and brightest individuals in our industry, but also outside of our industry.

And that's what we've been applying ourselves to do for sure.

For a long time.

And I think it's paying off I think we've attract.

High caliber individuals to the organization and Youre right that.

We are now in a position to expand the scope of services that we're offering to our clients.

From from digital offering.

The way down to detailed design work that we've done and we're known for.

Okay. That's helpful.

The other.

Concept I wanted to touch on was on the Earth in an environment side and whether there is any updated views on.

How much of a project is taken up by permitting hurricane environment type work today versus five years ago, just as a rule of thumb, because it's obviously increasingly importance Soc.

Social acceptability in is now it's no longer.

An option that's a prerequisite.

So requirement.

So theres nothing that is being built.

Unless.

There's been some some impact studies being conducted and theres been the proper permitting being secured.

So life is change and its never going to come back to what.

We used to know like 2010, a decade ago, even 20 years ago.

And the old.

Pieces behind growing our leading platform in the <unk> environment.

Environment is because we wanted to be there.

At the beginning of a project, where we could advise and support our clients and then bring the scope of services that we can offer.

To our clients.

So that we can deliver.

Our future ready project, so meaning that.

We designed today, but with the future in mind and being there early on in the processes for us very very important.

And that's why in 2017 18, we chose to take an aggressive stance on this and grow our platform accordingly.

Okay, and then if I could sneak in one more with respect to the U K in the MD&A I believe you noted double digit organic growth for the last number of quarters.

Theres, obviously been a change in leadership, there seems to be a lot going on in that market.

When do you think you'll start to get a sense of.

Where are they spending cuts are going to come and the impacts on on your business.

I think it is going to happen fairly soon.

I think there is many budget that will be announce.

I don't know I think if my memory is not failing me I think it's November 17 or something like that.

So so I think we'll know more at this time.

Look obviously, we are we are extremely pleased with the way our UK business has been performing and frankly, our central European business has been performing.

For me this goes into the call.

Very please in and then some ways above my expectations.

But we have an incredible business in the UK, we have in my personal opinion, the leading platform over there.

And we have.

We have probably one of if not the most diverse.

Platform in the UK.

So so we are we are in a position.

To win in all of the segments. So if the private sector and should.

Planning advisory sector is is cooling off.

In a recession, you would need to expect that.

Well I believe that in.

Public sector exposure, we will be able to compensate in some ways.

The cool down are the cooling off of perhaps the private sector.

The planning sector for instance, so.

To be seen.

And I promise you to update you on a quarterly basis.

But for now.

We're extremely pleased with the way.

Our cluster EMEA has been performing in 2022.

Okay. Thank you very much I'll turn the call back over.

Thank you Dan.

Okay.

We are now going to proceed with our next question.

And is from the line of Mike Capone from TD Securities. Please ask your question.

Thank you good morning.

Hello, Michael.

Good morning first question just another question regarding your organic growth outlook as we as we look ahead to next year.

You are still in your 2023 budgeting process and obviously there is a degree of heightened uncertainty.

Around the broader economic outlook at the moment, so that kind of clouds things, presumably but.

I'm wondering if you can talk about what end markets or what regions, you're most upbeat about.

Terms of organic growth as you look ahead to next year.

Okay.

Well, we are going to update you in more details at the end of Q4, Michael but obviously I think.

You look at the backlog that we have in North America.

I have to admit that I am extremely I'm feeling good about our north American market.

It's been it's been a very strong market in 2022.

And given like the announcement that have been made by our respective federal governments.

In the U S and in Canada, obviously.

It's difficult not to feel good about the prospect.

But im not prepared just yet to say that.

Our European cut.

Countries are are going to go through a very very very difficult time, Nextera I think.

With what we know today, we're also going in.

Still feeling good about.

EMEA.

And similarly, I think Asia Pacific is.

<unk> had a good organic growth year by all standards.

<unk>.

And we hope that this would continue next year so.

So all in all as I said during.

My address at the beginning I think.

You look at the financial ambitions that we have set.

For the company in February for the next three years.

And my personal opinion at this point in time to absolutely No reason why we should change course.

I'm feeling good about the business.

I'm feeling good about the team that we have the leaders that we have in.

And I'm confident that we're going to fine.

A way to deliver on on the ambitions that we have set for the company at this time I'm actually feeling very good about it.

Okay. That's helpful. Thanks, Alex and then I guess second question.

In your prepared remarks, you mentioned that the integration of the company's recently acquired businesses is going well.

Just wondering if you can provide any more detail on that process and particularly as it relates to the larger Eni acquisition.

Yes, I think.

The first thing that we apply ourselves to do is really.

Two.

To look into the leadership of our environment business globally.

You need to remember that we have now.

Over 20000 people expert in this sector.

This is a very large segment of <unk> now are presenting more than it's like 32% to 33% of our company. So.

This is not de Minimis and this is.

This is a sector that is having a great impact on our company.

We need to remember that just.

Not three or four years ago, we had about 300 people in an environment in the U S. Now we have more than 6000 leaders.

And professionals working in urban environment in the U S alone so we needed a.

A strong leader.

You take the lead for this business and I thought that Joe Circle.

The.

The previous CEO of our of the wood Eni business was that.

The best leader to take our 6000 professional on the journey of success. So so.

So we've applied ourselves too.

To make sure that.

We're ready to action, we're ready to win work.

And making sure that people are aligned and today I can tell you that.

Our Canadian business is very well position to win in the marketplace and equally now I feel we have the structure in the U S.

To make an impact so some are looking very I'm feeling very good about above the acquisition at this time.

Alright Thats helpful. Thank you Alex thank.

Thank you.

We are now going to proceed with our next question.

And the question is come from the line of Maxim <unk> from MBS. Please ask a question.

Hi, good morning, gentlemen, and solid quarter.

Was wondering if you can comment maybe on.

The M&A pipeline, and maybe sort of expectations from sellers supply seemed a little bit less P interest.

Interest, maybe just any color, perhaps maybe it differs by market. Thanks.

Look about Max first first and foremost I mean, given the six acquisitions that we've completed.

Already this year I feel we're probably ahead on our plan.

When you look at the <unk>.

<unk> ambitions that we had set so.

I guess, it's been a very successful year.

So far in <unk>.

And obviously I think that I think the pipeline is still very healthy.

Obviously, we.

<unk>.

Okay.

I'm sure you've heard me, saying that many times before it's very difficult to time acquisitions.

Sometimes they are coming as a bunch and some other times it takes you a bit.

It takes a while.

For transactions to materialize.

I feel we have a very good pipeline I'm still having very informal and sometimes more formal discussions with some companies.

I'm confident that <unk>.

Given the strong balance sheet that we have with our recent fundraise.

Going into 2023.

With the integration of Eni going very well.

We are going to be able to be opportunistic in the market like this and you said it yourself I think.

Given the interest rate given the market.

I think that the strategics have and will have at some point in time an advantage.

And WSB just wanted to be ready and positioned to take advantage of that so we just need to be patient.

And not get excited or really excited and waiting for the right opportunity to come along and.

If we are patient.

Stay focused and disciplined on our strategy I am confident that that will happen.

Alright, Okay excellent and then just a couple of other small ones I think.

In past quarters.

You mentioned data centers being sort of a growth driver for buildings I'm wondering right now I guess, how big of a market that is and given the tax spending sort of curtailments, if we should expect any.

Sort of a deceleration to actually show up in the numbers or other sort of on the vertical is picking up the slack.

I don't expect a slowdown anytime soon.

And this is a practice that we started initially in North America.

And we continue to expand in North America, very rapidly, but what's been amazing with.

The few acquisitions that we completed in recent years is now we have been able to bring.

Our two.

To export this expertise.

On the European continent, and also in Asia. So we are doing a lot of work for the Facebook and the Google of the World in Europe in Germany, and elsewhere, but also in Singapore.

And in Asia. So.

Asia Pacific So I think this is Ben.

A very good example.

<unk>.

Two or three small acquisitions that that turned out to be a great diving board for us to export this expertise as a center of excellence from one location to many other locations in our network. So.

I expect this to continue.

Okay excellent and then lastly, just in terms of the mining space, Obviously golder was very strong.

In that.

It seems to be still a pretty decent market. Just wondering if you can provide any comments there.

In terms of that that clinical specifically thanks.

Yes look.

Your question is so timely yes that it was our board and we have Kevin <unk> presenting at our board on the mining sector.

I am personally.

And as a company, we're still very bullish.

The mining sector and the opportunity around ESG are so tremendous Max.

And again I think given our acquisition of Golder.

Eni and all of the recent acquisitions, we did in climate change and the people we were able to recruit.

It's not just about providing design work for the mining sector. It's about.

Supporting those C suites.

The C suites of those companies into transition to green transition of this industry.

So.

And let's let's remember that Thats, an industry that is becoming more and more and more sophisticated so thats certainly.

The industry, we are proud to be part of it.

The growth profile for next year should be equally good as far as we are concerned obviously, we don't have a crystal ball, but we are feeling good about it.

Excellent. Thank you that's it for me.

Thank you.

We are now going to proceed with our next question.

And the question is from the line no further Rick Patterson from Raymond James Please ask your question.

Paul.

Thanks, Brad.

Guys, you've been flagging, the middle East as an area of strength for quite some time, but I recall this region slowing down dramatically when oil prices rolled over.

Seven eight years ago, how different or how resilient are your activities in the middle East now.

I think I would say over the last.

Hi.

Right after the 2014 downturn.

Oil and gas sector Fred.

We've taken.

A very cautious approach to the region.

We took a very cautious approach to the region and we've.

We've been extremely selective.

And the way we.

We pursue work.

I also have been quite demanding in the prepayment that we have been requiring an order fruit to pursue work.

So if today you look at our DSO.

Baird to where they were.

Seven eight years ago, I mean, theres no comparison.

So today this is a region, where we're generating margins that are.

Essentially in line with the average margin profile that we generate as a company.

We have a DSO profile that is.

Essentially.

Essentially close if not at the average of what we're able to achieve.

Globally.

And we have organic growth that perhaps its a bit lower than what we generally generate.

Globally for the reasons that I just explained.

We are very disciplined as an organization and we are very selective in the projects that we undertake.

And also over the over time, we've transformed our business and we do a lot more project management work and owner's engineer work.

And perhaps a detailed design work that we used to do.

In 2789, 10, 11 12, so over time, we have transformed the organization. So so for all those reasons.

I think we are doing well.

The region.

But we have.

We have memories of the past and we don't forget that so we are extremely careful in the way we are.

Selecting projects.

That's good to hear Alex Thanks.

Now moving on to Sweden, and Thats been a relatively quiet region for WSB recently, but momentum seems to be picking up there.

Can you discuss what's driving that is it.

It seems to be.

And contrary to what you were seeing out there.

We promoted a new leader more than actually almost a year ago, a bit more than a year ago and obviously it takes time for a.

The leader too.

Yes.

Just to turn to corner and and get ready to.

To execute so.

That leader is.

Next golder executive so she is known to us.

This is this was an internal promotion.

We're working closely with on the arena.

She is doing a very very good job, an amazing job and we're very very committed to the region. We.

We need to remember that.

The Nordics WSB as one of the only.

International firm.

To have a leadership position in that in that part of the world. So so.

So we're very committed to the region, it's an incredible place to do business.

And obviously.

We all know what's happening in the world right now.

And obviously, we're taking over.

Very focused on this and we're watching the market very closely.

But at the same time, we know that we have a good business there and we will.

We are continuing to deliver.

Continued to deliver I'm sorry.

<unk>.

Great. Thanks, keep it going guys.

Thanks, Brett.

We are now going to proceed with our next question.

Good morning.

Austin is from the line of <unk> Khan from RBC. Please ask your question.

Okay.

Great Thanks, and good morning.

I guess I just wanted to get a little bit of color on what youre seeing out there on sort of the pricing.

Discussions that youre, having presumably.

Last year, maybe into 'twenty three year backlog does reflect some of the inflation that you've experienced as youre, having discussions about the pipeline beyond sort of 12 months. How are you seeing the pricing trends. There are just starting to sort of come back to kind of call. It normal level just wanted your perspective on.

That part of the kind of the outlook.

Look.

I think our industry is not any difference to.

While we are experience globally.

I mean inflate.

Inflation of 7% to 8% I mean to suggest or to sit here and tell you that this is not going to have that.

Having an impact on.

On pricing in an industry I think would just not be.

Very honest.

So obviously inflation.

Inflation is and I said that on the last call. It inflation is not good news for for antibody.

There's no good news and with in times of inflation, having said all of that.

WSB, we are able to engage with our client base and are able to negotiate rates.

That.

Are essentially reflective of the environment in which we.

We operate at the moment.

And on top of it we need to remember that.

I would say in excess of 90% of our costs are variable costs. So that too is something that we keep in mind.

And we watch for.

In order to preserve and defend the margin profile.

We there's many levers that we need to action.

From amendments with clients and negotiation with clients to increase <unk>.

Two making sure we.

We're very strong in our recruitment process.

And are leading the way in that regard and also our frugal in the way we manage the business. So I think theres not one single solution for us to increase our margin profile this year.

It has many levers and I think.

We're fairly focused on all of them at the moment.

Okay, Great and then just maybe following up on your last comment there. It sounds like from the commentary demand is still good still sort of hiring but how are you sort of balancing. The addition of new folks to make sure you have been out for so just maybe not hearing too much I don't know if the concept of contract work for some of our employees given their what they.

But I wanted to get your idea of how youre managing that while depending in which sector. You are looking at absolutely have contract work.

So, especially in field work.

The summer season is over I mean, we.

Those contractual workers are going to leave the business and it's been like that for as long as I remember so.

So look at this.

This is a balance balancing act.

I want to get ahead of yourself, especially in time of inflation.

There is a danger of danger as an organization that you could get ahead of yourself.

And that you do either.

Either hiring too much.

Or increasing your cost too much, especially in the face of a potential recession. So so we're very focused on making sure that.

We are filling positions for project ready.

Work.

And obviously, given our track record at recruiting people.

We want to wait to.

Suggest that clear green lights from declines on on backlog projects and.

And soft backlog projects before we do anything so so we are we are quite careful about this.

Okay. One last quick one if we can I know you've got an ERP implementation going on you've got a new leader in the tech space, maybe just an update on kind of what part of that ERP process has been completed to date.

Sure. Thank you for that question so.

<unk>.

It's a project where first of all we are building a global platform for all our regions. So it's not a it's not a regional specific design solution. So what we've been working on.

Over the last little while.

Last year actually was to design. This global template that every region will now use going forward.

And this is.

Essentially completed we are now focusing our effort on rolling out this platform and the first region.

We're still on plan for rolling out in early 2023.

So.

It's going well the team is excited we actually have.

Our team from from the Canadian rollout in Montreal.

This weekend.

The team also thats starting to get ready for rollout in the U S and in the UK. That's also collaborating that are here in Montreal as well so it does actually.

Goodbye.

A lot of hard work.

Obviously, we remain cautious.

And disciplined on this project, but things are going well.

The dashboard currently is.

Is looking good on this project.

Sorry, if I could just squeeze in one more I guess would you be bringing the wood business onto this platform are they already on a similar platform the Eni business.

We are assessing this.

On a different platform now the plan is to roll them and roll them in on the new platform as well.

Thanks very much.

Thank you.

We are now done with this session for today and I will pass it back to double USB for closing remarks. Thank you.

Thank you so much for attending this call.

We look forward to updating you on our 2023 operating plan.

In Q4 of this year.

Again, if you do have any questions related to this quarter or any other questions. Please feel free to reach out to <unk> or myself.

Offline. Thank you very much and I wish you a great day bye bye.

Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect your lines. Thank you.

The conference will begin shortly to raise Johan during Q&A, you can dial star one one.

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