Q2 2022 Stantec Inc Earnings Call

Welcome to Stantecís second quarter 2022 earnings results webcast and conference call. Leading the call today are Gord Johnston, President and Chief Executive Officer and Theresa Jiang, Executive Vice President and Chief Financial Officer. Stantec invites those dialing in to view the slide presentation which is available in the investors section at stantec.com. Todayís call is also webcast.

Please be advised that if you have dialed in while also viewing the webcast, you should mute your computer as there is a delay between the call and the webcast. All information provided during this conference call is subject to the forward-looking statement qualification set out on slide 2. Detailed Instantex management, discussion and analysis are incorporated in full for the purposes of todayís call. Unless otherwise noted, dollar amounts discussed in todayís call are expressed in Canadian dollars.

and are generally rounded. Please go ahead.

Good morning and thank you for joining us today. We're very pleased to report another strong quarter of operational and financial performance.

Our second quarter and year-to-date results are tracking very well against our strategic objectives and as such we remain confident that we will deliver on our targets for the year.

There are two highlights for the quarter that I want to touch on before turning to our financial results. The first is an update on Cardno.

The integration is progressing very well and is in line with the expectations that we outlined at the time of the transaction.

We've already achieved our target of 10 million US dollars in run rate synergies 18 months ahead of schedule, and we continue to identify opportunities for additional savings.

The Oracle Financial Systems migration in Australia and New Zealand is largely complete, and we're in the final stages of the transition.

The US integration is in full flight and is progressing nicely. There is still a lot to be done, however we expect this to be completed before the end of the year.

The second highlight that we are very proud of is that Stantec continues to be recognized for our leadership in ESG.

For the 13th time, we were recognized as one of Canada's best 50 corporate citizens by corporate knights.

We're honored to have earned this recognition, receiving top court child scores this year for employee health and safety.

board and executive gender diversity, racial executive diversity, and clean investments.

This recognition affirms that our long-standing commitment to advancing ESG is having a real impact towards a more sustainable future, and we are very proud of the difference that Stantec is making.

Turning now to our Q2 results.

We are pleased to have delivered a 34% increase in adjusted EPS.

We generated 9.4% organic net revenue growth, and consistent with Q1, we deliver organic growth in every one of our geographic regions, and in each of our business units.

This reflects our ongoing ability to capitalize on the key drivers that I've spoken about previously and then I'll talk more about towards the end of the call.

A common thread through many of these projects is the need for the skills of our environmental services business, which delivered a 54% increase in net revenue, of which 12% was from organic growth and 40% was generated by our recently completed acquisitions.

Our Q2 results also reflect very favorable margin expansion.

with an 80 basis point increase in project margin and a 60 basis point increase in adjusted EBITDA margin.

Taking a closer look now at each of our geographic regions.

of activity in our U.S. business continues to gather momentum.

In Q2, net revenue increased by 27%.

with 9% organic growth and 14% acquisition growth.

We're pleased to have delivered organic growth across all of our business units as we did last quarter.

And this is a reflection of the robust level of investment occurring in the US.

Investment in the reshoring of semiconductor production has driven a significant amount of activity across multiple business units.

Environmental services net revenue grew by over 80%.

and continue to be the biggest contributor to U.S. revenue growth.

The combined Stantec Cardno team is very well positioned to address the strong demand for environmental assessment.

permitting and cultural resources work, in addition to ongoing monitoring and ecosystem restoration efforts.

Water shifted into double digit growth as activity ramped up on several major projects to address industrial and advanced manufacturing project needs and water scarcity in the western US.

and buildings continued its post-COVID recovery with another quarter of organic growth, driven by the need for increased healthcare capacity and investment in the civic, industrial and science and technology sectors.

Canada also continued to perform well, delivering 5% organic growth in the quarter.

Consistent with the themes playing out in the US, our environmental services business in Canada had a very strong quarter, delivering double digit growth on the strength of high demand for permitting work and our archaeological services.

Infrastructure delivered strong growth, arising from the strong housing market in Western Canada.

Organic growth in our transportation sector also reflects our continued support of British Columbia's recovery efforts from the extreme flooding that occurred last year.

Buildings continue to deliver organic growth on the strength of major public projects in healthcare and science and technology.

and growing momentum behind the energy transition and global food security initiatives continue to spur growth in energy and resources.

And rounding out our geographic regions is global, which had another remarkably strong quarter.

Net revenue in our global region grew by 40%.

Every business unit in global grew organically in Q2, delivering 17% organic growth.

Recent acquisitions delivered a further 27% growth.

The strong financial results Global has generated year-to-date reflect the maturing of acquisitions made in recent years and we are pleased with the way that we are performing together under the Stantec boundary.

Water continues to perform very well, delivering almost 20% organic growth on the strength of the UK, Australia and New Zealand Water Framework programs.

Infrastructure has doubled its net revenue with very strong growth in community development and acquisition growth in transportation.

And our mining sector delivered organic and acquisition growth on strong commodity prices, client diversification, and the listing of pandemic-related restrictions.

With that, I'll turn the call to Teresa to review our Q2 financial results in more detail.

Thank you, Gord, and good morning everyone. As Gord noted, we had a very strong quarter with an overall 21% and 23% increase in gross and net revenue respectively. Project margin grew by 25% and by 80 basis points as a percentage of net revenue. And this reflects our continued focus on project execution and our heightened diligence in project pursuits. We delivered a 27% increase in adjusted EVA debt reflecting the overall growth of our business.

Adjust as IBA demargin was 16.7%, 60 basis points higher than Q2 2021, resulting from strong performance across the business.

Net income and EPS decreased slightly to $61 million and 55 cents per share as increased EBITDA was offset by higher acquisition related costs.

We also recorded an unrealized fair value loss associated with our equity investments held for self-insured liabilities.

Adjusted net income and adjusted EPS increased 33% and 34% respectively to $93 million and 83 cents per share reflecting very strong earnings from our underlying operations.

Operating cash flows decreased to an outflow of $4 million for the quarter.

Cash flow was primarily disrupted by the Cardno integration due to the financial system migrations for both Australia and the US operations occurring during the second quarter, as we had outlined in our Q1 earnings call.

To a lesser extent, Q2 cash flow was also impacted by investment in working capital to support the organic revenue growth.

We view these causal factors as purely matters of timing, which will contribute to stronger cash flows in the second half of this year as the effect of the financial system migration dissipates and processing times normalize, particularly in Q4.

And we've already seen cash flows pick up in Australia after quarter end, which was the first of the cardinal migrations to occur this year.

We continue to be active with our NTIB earlier in the quarter, repurchasing just over 625,000 shares for $37 million.

Consistent with the change in our operating cash flow, our DSO is up three days from last year to 79 days. All of these factors, coupled with the funding of Cardano and other acquisitions in the past 12 months, resulted in our net debt to adjusted EBITDA being at 2.0 times the upper end of our internal range. As our cash flow normalizes over the remainder of this year, I'm confident that our leverage will return to the middle of our target range by year end.

I'm going to turn the call back to Gordon now to review our backlog and outlook. Thanks Teresa. Our outlook continues to be very very strong at a record $5.8 billion.

We grew back organically by 13% since the end of 2021 and again delivered organic growth in every geographic region and in each business operating unit.

Most notably, we achieved almost 30% growth in energy and resources and over 20% growth in infrastructure.

And buildings also achieve double digit growth.

Our backlog represents approximately 14 months of work, which is a high water mark for us.

Before I turn to the outlook for the remainder of the year, I want to comment briefly on the risk of a potential slowdown as a result of inflation and a possible recession.

We continue to monitor the situation carefully and have not seen any material slowdown in project or pursuit activity to date.

And as we discussed this with clients, the consistent feedback that we receive is that the risk of cost increases is being outweighed by the need to address a number of pressing challenges.

including aging infrastructure, climate change.

in production capacity constraints and the reshoring of domestic production.

And these imperatives continue to translate into investments and major project awards across all of our business units.

In Canada, our water business was successful in winning two significant projects.

the Buffalo Pound Water Treatment Plant Renewal Project in Saskatchewan, and program management consulting for the Iona Island wastewater treatment plant program in Vancouver, which is the largest capital program ever undertaken by Metro Vancouver.

In the United States, we want to contract with the Nebraska Department of Natural Resources to conduct floodplain modeling and mapping.

And we've also won awards in Hawaii and Indianapolis, which support clean transportation to help our clients reach their climate goals and objectives.

And in our global operations, we were awarded a Transportation Framework project in Scotland to support climate change adaptation and decarbonization.

With respect to capacity constraints and reshoring of domestic production, there are dozens of projects that we're working on in different industries, including in technology with semiconductors, healthcare with vaccine production, and logistics and fulfillment centers to shore up supply.

We are seeing significant government funding flowing into these areas.

As we look forward the rest of the year, we are very confident in our ability to achieve our financial targets.

Our backlog has never been higher.

having grown by well over a billion dollars in the past 12 months, and we continue to see project opportunities accelerate.

Significant US federal funding is moving forward, and even with cost escalation, our clients expect critical infrastructure projects will advance.

Private investment also remains robust, especially in areas of water and food supply and resiliency, healthcare, and industrial.

And in some instances, federal funding is helping drive private investment. And there's no better example of this than the billions of dollars directed towards the restoring of semiconductor manufacturing.

In late July , both the U.S. Senate and House passed a $280 billion Chips and Science Act.

From this, $52 billion will go to support semiconductor chip manufacturing, including $39 billion for plant construction.

Passage of this act was critical for many chip manufacturers to move forward with private investment and we are already working with five of the top ten semiconductor manufacturers.

And the strength that Stantec brings to projects of this scale is our ability to provide multidiscipline and expertise.

Our environmental experts, architects, transportation and water engineers all play critical roles in bringing these facilities into reality.

Europe has also passed similar legislation to restore semiconductor production.

So the opportunity for Stantec is tremendous.

Looking ahead, our outlook for the remainder of 2022 has not changed from the guidance we provided at the start of the year, and I believe Stantec remains very well positioned to capitalize on the opportunities ahead.

With that, I'll turn the call back to the operator for questions.

Operator?

Thank you. If you wish to ask a question at this time, please press star 1 on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. We will now take our first question from Devon Dodge from CMO Caption Markets. Please go ahead.

Thanks. Good morning, Gordon. Good morning, Theresa. The growth in the backlog year-to-date has been really impressive. Can you speak to how your bid pipeline looks, you know, what you see right now, and how that compares to maybe six to 12 months ago?

You know, the opportunities that we're seeing, we have a system we call our Stantec Opportunity Pipeline and so we do track projects that come in and it's interesting that we're seeing continued strengthening of projects in the pipeline. So I do think that as we see these projects in the pipeline, they'll come through the big process and so I think we see positive supports.

for the backlog growing even further as we progress through the rest of this year and into 2023.

Okay. Okay. And then maybe just continuing on with that, can you speak to your success in your hiring efforts to expand the workforce? I'm just trying to understand if there was a significant net addition of employees in Q2 and if this is expected to continue into the second half of the year.

Yeah, absolutely. And so, you know, one of the things that we've talked about is that, you know, we, through this period of uncertainty, you know, we want to continue to be, you know, a net importer of staff of our employee base. And so through all of 2021, through Q2 of 2022, as we talked about previously, and now I can confirm in 2023, you know, we hired more people than who left us. And so our headcount continues to grow. And in fact, we're up to a little over 26,500 people now.

So, we have had success in those onboarding efforts. We continue to grow organically, our employee base, and we look for that to continue for the remainder of the year.

Okay, thanks for that. Congrats on Q2. The results are really good. I'll turn it over.

Thanks, Devin.

We will now take our next question from Jacob Bout from CIBC. Please go ahead.

from Jacob Out from CIBC. Please go ahead. Good morning.

Morning, Jacob.

So strong double digit organic growth in the environment and water business.

Do you expect this to normalize in the quarters ahead or do you expect to see a step change going into 2023 and maybe talk through some of the revenue synergies from Cardinal?

Sure, you know the environmental business continues to be really, really robust. And so I think that we continue to see really positive performance in that group going forward, not just in North America but in our global operations as well. And the types of synergies that we're seeing are projects where previously, Cardno perhaps would have to sub out or hire someone else to do archaeological work. And now they hire Stantec for it.

where we have projects where Cardinal was strong in one geography, Stantec was stronger in a different geography, but we're now to offer these combined skill sets to our clients and take on larger and sort of more geographically diverse projects. So we're seeing a lot of synergy there. When we went into the transaction, we certainly foresaw that we'd have good linkages, good integration between the group and generate synergies and actually it has really exceeded

size of our environmental practice with bringing together Stantec, Cardno, Cox, McLean. There are at paleo this year as well. There are continued opportunities to grow that business. So you know we're going to continue to look there. There's a lot of mid-sized environmental firms in the US that would really fill in additional geographies for us. So you know we're always in conversations with these types of firms. So yeah absolutely not would we consider ourselves to be done.

in the environmental space from both an organic and an acquisition growth perspective.

Thank you.

Thanks Jacob.

We will now take our next question from Chris Murray from ATB Capital Markets. Please go ahead.

Yeah, thanks folks. I guess my first question, just thinking about your SG&A costs, maybe now that we've had a couple quarters of call it a more normal run rate with activity and folks backing offices and things like that, just wondering how you are feeling about some of the initiatives you guys have undertaken so far with real estate, and really your confidence in being able to leverage the existing SG&A, or how should we be thinking about needing to add...

to support further growth as we go forward? Sure, so as far as our admin and marketing costs go relative to pre-COVID, we're still seeing that discretionary costs are lower and that has been kind of the expectation that we established in the business that they would not return to pre-pandemic levels. They are certainly higher than last year and that was also to be expected as people begin to you know continue to travel more and

and Bart and Wilmore, those being farther afield, they do have significant costs associated with those. And so we do have an increase in those costs as well. And so those things together are going to contribute, but I think in a lot of ways have leveled off. I think as far as investments that we're making, and we're continuing to focus on our business development efforts on major pursuits, and that is a...

is contributing as well to slightly higher admin costs as we move forward. There are always other elements. There are so many costs that sort of flow through there that there are puts and takes all the way around. Our real estate, which you asked about as well, and you will recall that sits outside of admin and marketing and we are continuing to advance our optimization strategy that we began early last year and continue to be on track.

There's a lot of things going on. And then the other thing, the question, and then maybe Theresa again, maybe this one's for you. Right now with the close of Cardinal, you're really near the top of your leverage range. I guess free cash flow as you noted, or operating cash flows should improve in the second half, but we've also noticed you guys buying back some stock. Do you feel any pressure to have to get that leverage level down a little bit, just to support being able to do further acquisitions? I know you're still kind of inside your...

evidence of that, particularly as we come out of the integration, the financial piece of the migration at Cardno. And so, you know, I wouldn't say that I feel pressure. It's always important to me to, you know, to maximize their cash flows and, you know, have as much space as possible available on our credit facilities. I don't think it campers us in any way in terms of our growth ambitions. Access to capital remains strong.

And so I think that we'll just continue to execute on our plan through the rest of this year and beyond. And as we continue on our M&A journey, that as opportunities come up, we will fund them appropriately. I think we will continue to have good capacity on our balance sheet without having to go out and tap equity markets for the kinds of acquisitions in the size and scale that we have said we were pursuing.

Okay, thanks folks.

Thanks folks. Thanks Chris.

We will now take your next question from micel preparo from the jordgeon's capsuital markets. Please go ahead.

Yes, thank you. Good morning, everyone.

Some of your peers have been very active in M&A in the last few months. With the early success of Cardinal, have you thought about a larger transaction or is it still the medium to small with a thousand employees or less?

As we've been talking about over the last couple of quarters, we continue to look at acquisitions of all different sizes and we have certainly seen some of that activity in the marketplace but we'll stick to our knitting. We're making what we believe to be long-term decisions for the long-term sustainability of Stantec and shareholder value accretion.

So yeah, we're looking at all different types of firms, different geographies and different sizes. And in due course, we'll probably have an opportunity to talk more with you about that.

Thank you. Thank you for the color. And then maybe just secondly on the US Biden infrastructure plan, have you seen any more clarity or any signs? Is there really more of a 2023 story?

Yeah, so with the, you know, the big one of course is the IIJA. And you know we are seeing that the 2022 funding from that has been dispersed to the various agencies. Weíre currently working on projects related to that as well but we do see, you know, more and more projects coming out and while, you know, we are generating some revenue from it now, it certainly will be, will continue to strengthen through the second half of this year and really into 2023 and provideÖ

We also see additional supports from the Inflation Reduction Act, really from the perspective of what that could do from a renewable power perspective and renewable fuels, EV charging infrastructure and so on. I think we see a lot of strong supports coming for SANTEC and for our industry overall through the remainder of 2022-2023 and beyond.

Perfect, thank you for the great color and looking forward to third quarter.

Great. Thanks, Michael.

We will now take our next question from Mark Neville from Scotiabank. Please go ahead.

Hey, good morning, Lord. Morning, Christa.

Good morning. Earlier in your comments, you said you've already achieved 10 million synergies from Cardano. But when you're talking about the synergies...

channel a lot more like

revenue and some project pursuits that you won. So I just want to clarify, $10 million to date has been on the cost side. Anything that's revenue or real estate would be additive, is that correct?

Well you're right, the $10 million that we spoke about was on the cost side and that would include real estate, that would include things on IT systems and insurance and all those sorts of things that we've been working through.

But in addition to that, separately from that, and actually we didn't disclose a number on the revenue side, but we have hundreds of joint projects that are underway. And so, yeah, that $10 million that we spoke about, that was really only the cost run rate synergy that we had talked about and we have achieved that already ahead of schedule. And that's really just because of the, I think, the strong integration and the way that our teams are working together. You know, this isn't Stantec just coming up with ideas.

on how we can collectively reduce costs. Cardano is doing the same. And sometimes they're coming and saying, Stantic, if you did this, you know, collectively we could reduce costs. So it's actually been extremely, extremely positive.

Just on the real estate opportunity at Cardano, would it be material? Again, I think you guys were taking 30% of your footprint out. I'm just curious about the opportunity and the size at Cardano.

Yeah, it's hard for me to quantify at this stage. We're just not far enough along yet, Mark, to know. But I think it could be significant. But we're continuing to do that work. We'll have more to say when we're farther along.

Just to follow up on the M&A, two-part question. With the Cardinal going so well, would you feel comfortable doing something sooner or is the main focus still integration? In the second part, in response to Chris' question, you mentioned something about equity. I didn't know the topic was related to equity that was split away from that path. He is referring

I wasn't quite sure I caught what you said. Thanks. Maybe I'll start on the first part. A lot of these opportunities for more substantial M&A opportunities are really opportunistic.

know, we're always in different levels of discussion with firms and it really is when they're ready to come. You know, as you say, Cardno is going very, very well and so, you know, if there was something that was ready to come, would we hold off on it? No, I don't think we would. I think we would be ready to move forward but, you know, we also won't move forward and just do something because others have been. You know, we're going to keep our discipline and we'll…

we'll act when the time is right. And maybe I'll pass it to Theresa for the other question. Yeah, so the point I was trying to make, Mark, is that in response to the question of what our leverage being at the upper end of our range, and might that hamper us from doing M&A at this point? And the response is no. And as I look out towards the rest of this year, we're such a strong cash flowing business. That really has not changed.

So we've seen a couple of temporary dynamics that disrupted cash flows for the first half of this year, but that will normalize. And so to that extent, we will have a strong balance sheet. We will have lots of capacity on our balance sheet to be able to plunge the general size of acquisitions that we think about. Certainly a bigger acquisition, I can't take equity completely off the table, but as far as thinking about the kind and size and scale.

what's interesting when you think about a like a semiconductor manufacturing facility, other than the actual equipment that goes in inside the building to manufacture the chips, Stantec can do the rest of it. You know, all the water and high purity water, just general water and wastewater, the buildings, the site civil, the permitting, like we do all of that work. And so, you know, as we're talking with a number of these clients, you know, that's particularly attractive to them.

that we have one firm that can provide that multidisciplinary experience for everything except what's inside the building and there's others who do that. So, you know, I think that's an area. But, you know, in addition to semiconductor manufacturing, there's a lot of other re-shoring that we're seeing. We've just, I think, maybe been more focused on talking about semiconductors because it's an area that we're doing a lot in and it's certainly on everyone's mind these days. But we're working on...

vaccine production facilities, we're working on other renewable energy sort of equipment type facilities, solar panels, different things like that. So we're doing a lot of work like that Mark and it's really an exciting area for us. So I think all of these things combined is also a very, very strong tailwind for us for actually many years to come.

Thanks for the call. We're good quarter, yeah, delta. Thanks.

Great, thank you.

We will now take our next question from Brian Fast from Raymond James. Please go ahead.

Yeah, good morning Gord, Theresa. Good morning.

As you look at the backlog, are you seeing a higher rate of projects paired back or re-scoped? Just maybe some comments on the health of the backlog, just giving the shifting macro backdrop?

Yeah, so you know it's interesting as we look at the backlog, it's very healthy. The gross margin or the project margin in there is healthy. So we feel good about that.

We haven't really seen, as I mentioned in the prepared remarks, we've seen some projects, maybe people are talking about pushing them out to the right, but nothing material. And so to your point about with inflation and cost escalation are we seeing anything on projects, what we are seeing is sometimes is that we're getting an additional assignment from our clients to see how we could re-scope the project to bring it in at a lower cost.

So, in many cases, it's actually increasing our fees because of this value engineering component to it.

You know, is it something we're watching closely? Absolutely. But to this point it really hasn't, you know, pushing the backlog out to the right or cancellations has not been material for us at all.

Thanks, that's helpful. And then when we look at project margin, we saw similar trends as Q1 where US and global were up and Canada was down. Is that just related to mix in Canada? And then how should we think about those trends going forward?

Yeah, in this particular quarter there was a dynamic around project mix that had Canada a little bit lower. Our business is always going to be subject to those dynamics we talked about. It's project mix. It's how well we execute. And it's our ability to price these projects well and then deliver on what we priced it at. So we have seen an increased focus.

and discipline around those elements. And so as we look forward, we always talk about being in that 53 to 55%, kind of hit it right on the nose in the middle of those quarter and I would expect that that would continue.

OK, thanks. That's it for me. Great quarter.

Thank you.

Weíll now take our next question from Ian Giles from Stiefel. Please go ahead.

Morning everyone.

Morning, Ian.

Following on from the M&A questions and the success you're having with Cardno, how does it change your view about maybe sizing from an employee count perspective? If we went back a year ago, it was kind of the target was a thousand people or less. Cardno was obviously substantially bigger. Given your experience today, now, are you willing to go to an even bigger size if the right opportunity presented itself?

Yes, you know, I think it all depends on exactly as you said the right opportunity. And the reason that the Cardno acquisition is being so successful for us is that it's the right type of business and the cultural fit was there. And that's so huge for us. And so absolutely, I think if we saw the right firm with the right cultural fit transacting for the right reasons that would be additive to us, we absolutely would look at it again.

Okay, that's helpful and switching to the organic revenue growth side, global has been very, very strong for five quarters now. And you mentioned the term maturing in your prepared remarks. I was just hoping to get your thoughts around if and when you think the organic growth in that segment may revert to the mean or towards kind of the corporate average or whether it should stay quite high for the foreseeable future.

Yeah, I think, Ian, that it really has been pretty spectacular this year for Global. I would not expect that over multiple years it's going to have such high double digit organic growth. I think it will normalize. We haven't completed our planning for next year yet, so I can't tell you where we think that will land, but I would suspect that it will not be as strong next year that it could repeat this kind of organic growth.

That's helpful. Thanks very much. I'll turn it back over.

Thank you.

Thank you.

As a reminder, to ask a question, please press star 1. We will now take our next question from Saba Beth Kan from RBC Capital Markets. Please go ahead. We will now take a question from Saba Beth Kan from RBC Capital Markets.

Great. Thanks and good morning. So I guess on the guidance, I think when we think about margins for the rest of your first half flips.

roughly in line to slightly ahead. Is there any commentary you can provide on kind of the cadence of the EBITDA margin to a Q3NQ for any big picture puts and takes that we should consider?

Well, I think generally when you think about the cadence of our earnings, including our EBITDA margin, Q2 and Q3 generally tend to be the higher margin quarters. That's when we're busiest. And Q1 and Q4 slightly less. So, I think I would expect it to see generally that same shape this year. That they'll remain quite robust for Q3 would be my expectation and then come back a little bit in Q.

I feel your peers have really focused on that side of the business. How do you feel about pursuing more work in that area versus design? What are the capabilities you want to add? What's your mix right now? I just want to get your perspective on that piece of the business.

Yeah, program management is a very attractive piece of the business, absolutely. And so we are always looking to expand into that area. You know, when you think about the project that we spoke about there, the Iona Island Wastewater Treatment Plant project, it's a massive undertaking. And so the program management there will, you know, it'll be for, you know, five years or more. So these are really nice long-term, long-duration projects where we can make a difference for our clients.

So it is absolutely an area that we're looking to continue to grow into, to grow even further south.

Okay, great. And then just kind of one last one. I think over the last few quarters you did indicate that you want some projects late last year on the U.S. side that were just getting going. I guess with the growth that you reported this quarter, should we assume that those bigger wins from last year are starting to flow through and those are underway?

Absolutely, yes that's what we're really seeing. It takes a little while for the funding to get going, for the awards to happen and now we absolutely are beginning to generate revenue from a number of these larger US awards that we previously announced.

Thanks so much for the call.

much for the call. Great. Thanks, Abba. Thank you.

As there are no further questions in the queue, I'd like to turn the call back to your speakers for any additional or closing remarks.

Well, just thanks again for joining us today and we look forward to connecting with you in the weeks and months to come as we continue to evolve through executing on our 2022 plan. Thanks very much everyone. Thank you.

Thank you. That will conclude todayís conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.