Q4 2023 WSP Global Inc Earnings Call
Okay.
Good morning, everyone welcome to type of U S. P S fourth quarter and fiscal 2023 results conference call.
I'd now like to turn the meeting over to Quentin Weber of Investor Relations. Please go ahead Mr. Weber.
Thank you for attending the call today, we'll be discussing our Q4 and fiscal 2023 performance followed by a Q&A session.
Joining us this morning.
And now let me show our CFO. Please note that this call at all.
On our website during.
During the call, we will be making forward looking statements and 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 could differ materially from those forward looking statements are listed in our MD&A for the year ended December 31st 2023, which can be found on SEDAR and on our website.
Additionally, during the call we may refer to certain non <unk> measures.
Sure It's Earl.
Finally in our MD&A for the year that ended December 31st 2023.
Our MD&A includes reconciliations of non <unk> measures for the most directly comparable.
Management believes that these non <unk> measures provide useful information to investors regarding the corporation's financial condition and results of operations as they provide additional key metrics of its performance.
Non <unk> measures are not recognized under apparatus.
Have any standardized meaning prescribed under a correct and may differ from similarly named measures reported by other resource 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 Eric.
Thank you Ken and good day, everyone I am pleased to present, our fourth quarter and strong annual results I will also use the opportunity to provide an update on key milestone we achieved in the second year of our 2022 2024 global strategic plan.
Starting with our fourth quarter performance, our corporations continued to deliver solid net revenue growth and our margin profile improved by a very robust 150 basis points to reach 19% compared to the fourth quarter of 2022.
We have also seen a good level of cash flows and our business continued to capture many strategic win which I will cover later.
Turning to fiscal 'twenty, two 'twenty three to consistency and rigor we applied in our operations has translated into strong financial performance.
First net revenues are up 22% or nearly $2 billion, resulting from strategic acquisitions and healthy organic growth of seven 3%.
This was achieved with the contribution of all of our reportable segments also a record high order intake of $115 1 billion continues to reflect positive market conditions.
Adjusted EBITDA is up 26% or nearly 400 million dollar adjusted EBITDA margin stands at 17, 6% up 55 basis points, surpassing our yearly margin expansion ambition of 30 to 50 basis points.
We delivered beyond expectations and remain laser focused on profitability as we pursue our ambitious target of reaching a 20% adjusted EBITDA margin.
<unk> adjusted net earnings are up 24% or $1 15 per share stemming from accretive acquisitions and continued significant productivity gains.
We are proud of these results as they demonstrate our strong execution and a year of significant consolidation and transformation activities. Overall, we delivered robust results at the high end of our financial outlook range, which as you will remember was revised upwards significantly and AGA.
<unk> 2023.
Let me now make a few remarks on each of our four strategic pillars, namely people expertise clients and operational excellence.
On people, we are now one of the largest engineering engineering and professional services firms with close to 67000 deeply talented employees, who are positioned globally to solve solve the worlds most complex challenges.
We persist in advancing on several initiatives to.
To become an even more unified WSB and deliver an even better employee experience. We are transforming our organization with the new ERP that has been deployed in some of our key segments and is now being leveraged by approximately 30000 employees in Canada and.
In the U S and we are planning its implementation in other regions.
On expertise, we strengthened our presence in key markets, our proven experience identifying and integrating industry, leading brands led to the creation of our nearly 20000 people strong urban environment franchise most of it in the last two years as we welcome new colleagues from <unk>.
Eni and golder amongst others.
Our global platform is positioned favorably to address clients' future needs as water energy transition net zero commitments smart infrastructure and climate change remains critical area of focus.
On clients, we increase our volume of business by over 20% through a combination of organic and strategic acquisitions. This growth is attributable to a disciplined and focused execution of business plans across all our sectors and the substantial focus we.
Put on our global client care program.
Lastly on operational excellence, we drove stellar performance and efficiency through our multiple margin expansion initiatives, we own them and our productivity metrics, while ensuring our our organization remains agile leverages our excellence centers.
And efficiency deliveries on our projects.
On top of strengthening our platform, we are future proofing WSB to support our growth ambitions Ws.
Wsb's uniquely diversify with top three tier a top tier sectors bills.
Through our history.
First transportation infrastructure delivered double digit organic activity levels in the U S U K, Canada, the Middle East, Australia, and New Zealand.
This is a testament to our leading expertise in bridges mass transit highways and rail.
<unk> continues to be exceptionally well positioned to benefit from the various stimulus programs being deployed globally.
On <unk>, we continued to see positive momentum stemming from the bipartisan infrastructure Bill in the U S. The biggest opportunities for this bill and other stimulus programs globally are in roads bridges and major transportation projects. This is fully aligned with wsb's, leading transportation and <unk>.
Our structure sector.
Moving on to our property and building sector. Our focus in the recent past has been on diversification and we see high demand for our services in Canada, The U S UK and Australia.
More so in hyper growth sectors, such as healthcare hospitality Entertainment data centers mission critical and in manufacturing.
Lastly, and as I mentioned earlier, we have efficiently.
Our strategic urgent environment sector, which is benefiting from robust momentum across all our geographies.
We have the privilege of providing expertise and advice to clients on most ESG related matters.
Including water scarcity biodiversity Earth Sciences, biomass, environmental permitting and social acceptability just to name a few.
Our future is not short of growth opportunities as global trends point to a higher demand in all of these fields of expertise a good example of that being the energy transition and the drive toward.
Carbon neutrality for power generators and consumers.
Across our portfolio, we are awarded projects project, sorry to support wind and solar generation as well as planning designing and managing programs for the build out and upgrade the transmission and distribution lines.
For example in the U S. We want a projects Nonetheless, propel New York Energy a collaboration between the New York Power Authority in New York Transco the.
The project Intel's building out the transmission grid in New York contributing to the achievement of the city's clean energy transition goals of having a zero emission electric grid by 2040.
WSB scope of work includes environmental planning and permitting stakeholder engagement civil and electrical design and overall project management.
So the word wsb's delivering for Champlin Hudson Power Express and please pass New York.
Combined these represent nearly $20 billion of.
New electric grid infrastructure investment in New York and less than two years with WSB players playing a pivotal role in the delivery of all three projects.
And the UK WSB has been appointed by National gas to develop best practice guidelines on the design and build of a new hydrogen network.
In Sweden, we are supporting clients to develop hybrid energy solutions, combining wind solar and hydrogen for more reliable and carbon free energy system.
We are also helping with the expansion of offshore wind development in Taiwan to reach a target of five gigawatt of renewable generation.
The energy transition provides a broad range of opportunities. Just recently, we were awarded the entire multi disciplinary designed for Volkswagen largest facility worldwide and they're only plant in North America. This is one of the largest battery facilities globally and we are leveraging.
<unk>, our global expertise from active electric battery projects in Sweden, Italy, and South East Asia to deliver.
I would now like to share a few of our recent accolades.
<unk> has been included in corporate Knights prestigious Global 100, most sustainable Corporation in the World for 2024 and ranked the 12, most sustainable Corporation.
This acknowledgment is a testament of WSB commitment to sustainable business practices as well as gender diversity.
We earn placement on the Dow Jones sustainability, North America index for the first time.
Industry standard recognizes the top 20 sustainability performers amongst the 600 largest companies in the U S and Canada based on long term economy, environmental and social criteria.
Wsb's inclusion as an additional tribute to our dedication to build a more sustainable world.
<unk> was also recognized as the world's leading environmental and sustainability consulting firm in environments Analysts' annual state of the industry report.
We are proud of our ongoing progress on our sustainability journey and I congratulate our all of our teams for these achievements.
On that note, let me turn it over to <unk>, who will go over our results in more details. Thank.
Thank you Alex I am very pleased to report on our strong results for both the fourth quarter and the full year.
Starting with our top line for the fourth quarter revenues and net revenues reached $3 7 billion and $2 $8 billion up five 8%, respectively compared to Q4 2022.
Net revenue organic growth of five 1% in the quarter is attributable to all reportable segment globally net revenue organic growth would be approximately six 5% when excluding the significantly lower demand for emergency response services as the hurricane season generated a notable.
Decrease in inspection activity for the Americas, excluding the same item our operations delivered strong organic growth of eight 6%.
For the full year revenue and net revenue reached $14 $4 billion and $10 9 billion up 21%, 22%, respectively compared to 2022, reaching the high end of our latest net revenue outlook range for the year of $10 $7 billion to $11 billion the <unk>.
Kris was due to sizeable acquisition growth of 12, 3% and healthy organic growth of seven 3%, which was pulled from all reportable segment.
Ganic order intake reached a record high level of $15 1 billion for the year, resulting in a backlog as of December 31, 2023 up $14 1 billion.
11, eight months of revenue up eight 2% in the year move.
Moving onto profitability adjusted EBITDA in the quarter grew to $525 million compared to $446 million in the fourth quarter of 2022, an increase of 18%.
Adjusted EBITDA margin for the quarter increased by a robust 150 basis points to 19% compared to 17, 5% in the fourth quarter of 2022.
The increase is mainly attributable to strong project performance and significant productivity initiatives.
For the full year adjusted EBITDA grew to $1 $92 billion up 26% compared to $153 billion in 2022, reaching the high end of management's latest outlook range of one nine to $1 $93 billion.
In 2023, the adjusted EBITDA margin increased by 55 basis points to 17, 6% against the previous year beyond the higher end of the Corporation 2022 to 2024 strategic ambition to increase the adjusted EBITDA margin by 30 to 50 bps annually.
Lee.
For the quarter adjusted net earnings reached $248 million up $39 million or 18% compared to the fourth quarter of 2022 and for the year adjusted net earnings increased by 24% to $860 million or $6 90 per share.
The increase is mainly due to higher adjusted EBITDA, partially offset by the impairment of long lived asset, resulting from our ongoing optimizations as part of our real estate strategy on this front, we're very pleased with the progress and are well on track to exceed our 2024 goal of reducing by 20%.
Our real estate cost and footprint.
I will now review a few cash flow metrics free cash flow for the quarter was $610 million a record cash flow generation in the quarter.
Free cash flow for the year ended December 31, 2023 was up 40% to 400 to four on <unk>.
$433 million, sorry, compared to $309 million in 2022.
Free cash flow represents 110% of net earnings attributable to shareholders when excluding higher income tax paid due to tax regulation in the U S, which delayed the deductibility of R&D expenses.
Of interest the situation on this specific U S regulation remains fluid and should that change occurred could presumably impact our free cash flow.
DSO as of the end of the year stood at 76 days compared to 73 days as of December 31, 2022, we have stabilized the DSO situation in Canada. Following the implementation of our new ERP and are devoting effort to normalizing DSO in the first half of 2024.
Net debt to adjusted EBITDA ratio stands at one five with the management's target range of one to two.
Lastly, I will comment on our 2024 financial and operational outlook.
Before I start I'd like to remind you that the outlook for our anticipated 24 performance is aimed at assisting analysts and shareholders in refining their perspective on our performance that has been prepared based on foreign exchange rates effective February 28, 2024, and also note that we have not considered any acquisition.
<unk> disposal or any other transaction that may occur after today with.
For 'twenty four we anticipate net revenue to be in the and the 11 two to $11 $7 billion range and adjusted EBITDA between.
Two 5% to $13 billion range, representing a midpoint target EBITDA margin of 18, 3% or approximately 65 basis points higher than 2023.
We expect the consolidated net revenue organic growth on a constant currency basis to range between five and 8%.
We continue to see positive market fundamental across our operation and anticipate mid to high single digit organic growth for Canada in the Americas and mid single digit for EMEA and the APAC regions. This reflects our current assessment of market condition and our continued ambition to increase our margin in line.
'twenty two strategic financial ambition.
First quarter 'twenty four we will have two less billable days in the first quarter of 'twenty three while the fourth quarter 'twenty four we will have two additional billable days than the fourth quarter of 2023, the impact on the quarterly organic growth is expected to be approximately negative 3% in Q1, 2024 and approximately 3%.
<unk> positive in Q4 2024.
As of note, we aim for 100% conversion of free cash flow to net earning in 2024.
And we manage our capital structure to maintain a net debt to adjusted EBITDA ratio between one and two other items of our 24 outlook, including quarterly distributions seasonality tax rate and others are described in our press release in conclusion, we're very proud of our accomplishments in 2023.
And the year significant consolidation and transformation delivering strong results ahead of our expectation, we feel ready to seize opportunities in 'twenty four and beyond now back to you Alex.
Thank you Eli I'm very satisfied with our performance in 2023, as we concluded a year of significant growth consolidation and transformation.
We have substantially completed the integration of our recent strategic acquisitions.
We have a strong balance sheet to support our ambitions and I am confident in our ability to deliver on our 2024 financial goal.
<unk> 2024, we stand firm on our strategic aspiration to deliver a 20% EBITDA margin.
We added 85 point points to adjusted EBITDA margin since the launch of our strategic plan and our 2020% or 20% ambition is clearly within reach based on the midpoint of our financial outlook, we aspire to the 150 basis points improvement into 2022.
In 2024 strategic cycle, and we continue to foresee margin improvement opportunities.
There are many ways for us to grow and push even further as the markets remain fragmented the pipeline is healthy and we intend to continue to scale and expand the franchise by consistently adapting to client needs.
To have the platform to discipline that people.
We have im sorry, the platform the discipline that people and we have the desire to grow the.
The future is bright for WSB.
I would like to conclude by thanking our employees around the world their talent work ethic and dedication to what really matters for our clients for our communities and for US strongly contributed to 2020 Three's success on that note. We will now begin the Q&A.
Session. Thank you.
If you would like to ask a question you will need to press star one and one on your telephone and wait for your name to be announced and to withdraw. Your question you can press star one again.
Please standby, while we compile the Q&A roster.
Yes.
Yes.
Yes.
Thank you we will now take our first question.
First question is from the line of Yuri Lynk from Canaccord Genuity. Please go ahead.
Good morning, guys Hello, good morning.
Good morning.
Yes.
On your end markets, I mean, certainly transportation and infrastructure.
Strong market for WSB last year.
But just curious how youre newly formed Earth and environmental services platform.
Formed in any perspectives on wood.
When fully.
Fully integrated now.
This is a great question Yuri.
As indeed as you just mentioned trends transportation continue to.
Perform extremely well for us.
This is perhaps one of our most mature sector.
When you look back on history.
We have been driving this sector for a fairly long time and when you look at the bipartisan bill in the U S. This is by far and oftentimes, it's probably 10 folds the size of the water funding.
So clearly I think we're extremely pleased to be to be performing in transportation equally in the building sector. This was.
Strong strong performance for us and I'm extremely proud of how we were able to diversify.
That sector.
Sometimes you need a bit of luck and also some vision then between 2015 and 2020 adjusted pre before Covid.
We really ventured and completed acquisition and other sub sector has been the higher high rise commercial sector and commercial market, then and today, it's clearly paying off especially in.
And the health care sector.
And the mission critical work that we do so we're we're obviously feeling good also about the building sector and we intend to continue to grow that sector going forward.
Lastly, this is perhaps our youngest sector or the newcomer in the family when you look back.
Where we were in 2018.
<unk> environment was representing less than 10% of our revenue. If my memory is not failing me was six 7%, 8% something along those lines.
And you look just at the start of Covid in early 2020, just in North America alone, we had approximately something like 2000 people between Canada and the U S.
And when we completed the gold acquisition completed ecology environment and also completed the.
Wood Eni business.
This head count grew to 12000 people just in North America alone.
So I don't spend much time talking about it but we are extremely proud of the integration work and the consolidation work that.
Has been going on in the background.
If you look at the work that we've done in 2023, we have now our north American platform on the new ERP.
And we have a very strong in urban environment practice with at the moment the best operating margin in our group. So so all that to say that I'm very proud of that consolidation.
Work that we've done over the last 12 to 18 months.
That's helpful. Maybe I'll just push a little more on that point I mean.
You have made such a.
A big strategic shift into Earth and environment.
<unk>.
Could you provide us with.
Okay.
The organic backlog growth in that sector and just your expectations for 2024.
Yes.
Very strong organic growth that we are expecting in 2024 and range with transportation and property and building.
Okay.
That's great I'll turn it over there thanks guys.
Thank you Larry.
Thank you.
I will now take our next question.
This is from the line of Jacob <unk> from CIBC. Please go ahead.
Good morning.
Hello Jacob.
My question is on.
Just on your M&A pipeline.
You had a very busy first half in 'twenty three but it seems like the pace of M&A has slowed.
And maybe just talk through that I know, it's lumpy but.
So lots of appropriate targets out there.
Soccer valuation.
Maybe some some thoughts here.
No no absolutely not.
It's not about.
The weak pipeline or backlog.
Potential acquisitions.
As I just described I think we in the course of the last 18 months. When you had four months, we completed two very significant acquisitions.
One being in a partnership with 3000 shareholders.
They want a carve out from a publicly listed company on the London stock exchange.
Jacobs require a lot of work.
We're very pleased with the performance of that sector as I stated.
Our highest gross margin in our group so we're feeling extremely good about it but.
But.
Suffice to say that we needed the attention and care and we needed to deliver to good.
It's one thing to write a check but it's another to integrate.
12000 people into our group.
I feel we've worked very hard and then parallel completed last year caliber.
Which allowed us to enter.
A new market in Australia, and equally we were able to complete now.
A significant acquisition in Switzerland, which is now, allowing us to be a tough tier player in the country. So so I feel in parallel we were busy.
I think if you know put simply in 2012, when Jenny involved in Douglas became together.
We created one of the leading franchise in the property and building sector when when W. S. P N and Parsons Brinkerhoff.
When when it'll be just be completed the acquisition of Parsons Brinkerhoff instantly, we created a leading franchise with.
And the transportation infrastructure sector.
And equally now I think with would then golder, we we created a strong bran and the art environment sector. So as you can see we took a very deliberate and and and disciplined approach at a building our our sectors and building our company and.
And we're gonna continue to to grow those sectors and adjacent sectors to create a more diversified that form over time.
Okay. Thank you.
Thank you.
<unk> Oh now take our next question.
And this is from the line of Michael do my from <unk>, Please give a hat.
Hi, good morning.
Good morning, Michael.
Uhm fantastic work on the margins and I know you guys are discuss this in your prepared remarks, but I wanted to know or maybe just wondering if you guys can help us break down some of the major drivers and the margin expansion in queue for and how you you the anticipated margin expansion in 2024 and I guess this is a follow up given the outsized.
You know anticipated margin expansion into 2024.
You have a better sense of the timing of when you can reach that target or 20 per cent.
Well.
Put it as simply I think when we uhm compensated of 2022 2024 strategic plan.
We mentioned that our long term vision was to reach 20 per cent.
Uhm, if you fast forward to two or three years now I feel it's no longer a longterm vision, it's a short term two midterm vision.
Perfect.
Maybe sticking on on margins here, you know if I do look back and compare maybe the twenty-three margins versus those of 2021, you know solid margin progression in Canada in India.
You know margins are down in a pack I would assume that's <unk>.
China. So I guess the first question is is the headwind there debating.
And then if I look to the Americas Uhm no margins there had been relatively spot. So you're just curious of what explains that and if you think you're turning the corner.
But.
I think I'm I'm extremely please of our performance and the absolute but.
But I am.
Even more please of our performance on a relative basis.
Let me explain to you what I mean by that.
Of course, when you look at the absolute number I'm proud of.
Of where we stand and award that was accomplish but.
But what I'm extremely proud of is is the the trajectory of of the company when you look at.
2020, but let's be 2022, our margin explain an expansion <unk>.
<unk> Judy basis point in 2023, our margin expansion reach 55 basis points and if you look at the mid range of our outlook for 2024 were opening for something along those lines of 65 basis points. So in total this would be an increase of 1.5 per cent and already been done margin.
Over the course of our struggle plan, but it's just a word or were growing stronger and I'm extremely proud of that and then and I'm extremely please up that we're seeing a consistent improvement in the way we operate the company and that's something that we should be please us.
Alrighty I'll leave it there.
Thank you thanks Micheal.
Thank you and May I take our next question.
Uhm.
This is from the line of Jonathan <unk> Bank. Please go ahead.
Good morning, and thank you for taking my question is picking up on that.
Discussion on the margin. So so thank you Alex for sharing that the 20 per cent target is now short to medium term and uhm.
Discussing the consistent improvement in the way that Wsb's operated my question is could you provide a little bit more detail on what's providing your confidence in this level of margin expansion for 2024, specifically and uhm.
Over the coming years, Elaine mentioned, the productivity improvements in the European implementation.
Uh huh, well I'm I'm I'm feeling confident because of the work that is taking place in the last two years of our strategic cycle.
Last year, I mentioned that was a year of consultation and a year of transformation.
Today, we have our north American business, which represents roughly 68 65 per cent of the <unk>.
Of the company on on on a new platform.
We intend to migrate other large.
Segments on countries of operation onto the platform. This year in parallel of that we integrate it two of the largest acquisition we ever completed as a company.
And yet we deliver at 7.3 per cent of organic growth combined with a strong margin improvement so.
There's not a lot not to like about the performance in 2023, and all I can assure you of this though we're gonna continue to drive the business too.
Raise the bar as a company and to raise the bars and industry. So that's how we feel about the company right now.
Okay. Thank you and.
Question on.
The ERP system implementation is that now live in the U S and when do you expect to go live in the UK.
It's five in the U S and we intend to be alive in the second half of this year for the UK.
If just switching topics.
You know stimulus funding for transportation in particular.
Appears to be an exciting opportunity for 2024.
You know we.
Saw good growth in the backlog in the Americas in 2024.
Are you expecting.
Positive impact your your backlog over 2024 based on the cusp.
Customer discussion do what you can see.
Wow.
I mean, there's there's there's continuing to momentum.
In the U S and elsewhere, so surely where or feeling good about it and I I think I I I talked about this earlier on on the call.
People tend to focus a lot of their time and energy on the on the water sector.
Which in total <unk> represent 35 billion of the total funding.
<unk> and transportation, we're talking about $350 billion, which tenfold the amount that will be allocated to water.
And WSB as the leading franchise worldwide and transportation. So I feel we are uniquely positioned to take advantage of of what's going on around the world right now.
Okay. Thanks for your comments.
Jonathan.
Thank you.
And I'll take our next question.
This is from the line of seven Dodge from BMO capital markets. Please give a hat.
Thanks, one guy.
Hello <unk>.
In 2023, we saw that headcount was roughly flat year over year. If you exclude acquisition divestitures suggest that the seven per cent organic revenue growth.
Largely from some sort of you know pricing productivity and <unk> to higher value services. Just wondering do you expect these dynamics to carry over into 2024 or could we see a bit more head count of different this year.
Direction Lee I think this is a fair assumption I think what I am trying to say here is that.
We want to extract the value of the incredible platform that we have now.
So where possible if you can do more with less. This is this is fantastic news and 2020 through as an example of that we increase productivity, we significantly invested in the platform and technology.
So we were gonna continue to drive the business to to achieve those results.
Okay. Okay makes sense. The second question on the E. R. P rollout I believe.
WP spend about $130 million on this information implementation today and thank you planning another $60 million to $80 million in 2024. So just a two part question. One is is there much left to do after 2024 and then the second part is that when you guys were evaluating undertaking this project what sort of payback were you expecting to generate from that the best.
Yeah. So we.
We we devoted a lot of effort in 2023 is you know preparing you know doing the rollout in Canada preparing.
Are two next larger region to go live in 2024, which was the U S. In the UK is Alex pointed out which will happen.
And in a short period of time, so that's what we've done the effort right now is focus on delivering the rest of the platform, which will happen in the first half of 2025, So I would say that the bulk of our investment if I include 24.
<unk> will have been done will have some some less than 25 for sure but you should start seeing a decrease in the spending as you've seen in 24. So that's the expectation. We're in line with the the investment that we had announced in in our <unk> plan in early 2022. So.
We continue to be.
On time on budget, so very <unk>. Please about it very proud of our team.
Going through the transformation.
And in terms of of payback I mean, you you need to do those investment to ensure the the.
The resiliency of your platform and gain insight and run a stronger business. So.
We see we see great value on that front, we see great value in the quality of the inside will win will earn with the platform and how it's gonna help us to drive further the business and obviously as you as you look into the way we're organized.
If we could make the the various back in of the farm a bit more efficient and mow focus on bringing value.
That that's the intention. So we think that this will bring significant benefit for the long term of the company.
Okay makes sense makes that I'll I'll turn it over.
Thank you.
Thank you.
And I'll take our next question.
This is from the line has been <unk> from day shutdown. Please go ahead.
Good morning, good morning, <unk> congrats for the strong results.
Just to come back on the <unk>, obviously, you were able to achieve a 55 bps improvement in 2023, you were looking for almost a 65 beeps improvement in 2024, you work clear that this was transformational your with <unk>.
Also with your P implementation. So I'm just curious that now that the R. P implementation will be Oh, most of the way towards the end of 2024, what could we expect in terms of EBITDA improved ma'am post 2024 could could we be thinking at the north that's.
65 bps and I'm, just wondering about the definition of short too medium term.
A vanilla I mean, we need to keep some good news for later [laughter]. So obviously, we are in the last year of restaurants on getting aside this is a year for us where we we we need to reflect on.
Where we wanted to take the company forward so <unk>.
<unk> February next year, when we roll out our next to your plan.
We will be in a position to provide you with more details related to what we intend to do what our our our financial aspiration and as I said, where we wanted to take the business forward.
But I I.
Suffice to say that I I I think it's fair to say internally, if I speak to <unk> I'm thinking about the company and myself.
All of the significant investment that we've made in the company in recent years.
Uhm.
Making sure that we run a very tight ship as an organization very selective in the projects that we undertake reduce the margin erosion on on certain jobs. You know I think the future is bright for the company.
And I clearly have now my my site Uhm on reaching that goal of reaching 20 per cent margin. So.
If a few years ago. This was a vision.
Today is a mission.
Okay and looking at productivity 2023, you were able to deliver strong performance. Despite the flattish account it looks like that there's more potential towards improving productivity going forward could you maybe share. Some example of what could be done.
In terms of further improving productivity.
Well I I think I think I think professional and staff mobility is a very simple example of that.
I think we are becoming more and more effective in the way that we mobilize and demobilize our team. So there's a lot less downtime.
And I feel that we have eliminated silos around and across the organization. So now we are in a position to pull resources for instance from Fucker Metro in Colombia, and Remobilize those that workforce on other large assignment globally and so these are.
Examples where we are able to save last time, and we are able to become more efficient number one number two this year, we reduce our turnover by 200 basis points. That's not the <unk> you know hiring and training new individuals is extremely expensive.
Cause you're losing time.
So by reducing our turn it over we were able to be more efficient in the way that we deliver work and that too is having a great impact on our productivity. So so I think there's a number of different initiatives that we can tackle but we are laser focus on making sure that we're creating a great people environment.
Within the company to continue to perform.
Okay, and what to respect your sub backlog could could you may maybe provide some color about how would materialize in Q3 I think last order you said that the increased 30% since the beginning of 2043 and about 50 per cent increase in Q3. So I'm just curious to get an update on the soft backlog.
Directional or the same.
Okay perfect that last one for me D. S. So you were able to finish the you're at 76. It looks like that you expect stabilize via so worked 70 to 79 days. So could you provide some color longer term, whether you could come down back to <unk>.
<unk>, maybe you could talk a little bit about free cash flow conversion, we should be expecting in 2024, given the the the legal tax implications.
Yeah, most 70 improvement will come from North America, Vanilla for self explanatory reasons, we converted.
The North American platform to a new E. R. P.
And we intend to this is a timing issue and we clearly intend to revert back to normal levels.
Fairly quickly.
And on free cash flow <unk>. The the the target this is 100% free cash flow conversion.
We and on the tax side, the Edwin that we face and twenty-three was about 150 million dollar we anticipate a little lower in 24 to around about 100 million dollar. So so the that's our that's our intention.
424.
Okay. Thank you very much for the time.
Thank you <unk>.
Thank you.
Now take our next question.
It's from the line of Friday, Thank best town from Raymond James Please give a hat.
<unk>.
Today I do <unk>.
Uhm I was Super please with the strong performance of your EMEA region, Uhm, which you attribute to the performance in the UK in Central Europe would you mind, giving us a bit more color on how all these.
<unk>.
Yeah, we certainly do not mine cause. This is good news I mean, the <unk> the UK continues to to surprise us.
And you know what when you have strong leadership.
Strong performance and we have a very strong team in our UK business. So.
We continued to commend them for their outstanding work and then Central Europe I think this is no secret the Frederick got that this is.
This is a region of interest for us.
We continue to have scattered a region to find the right acquisitions B G was the start of that last year.
And we continue to look for a good firms in the region at but the performance of that business as improve significantly over time again because of strong leadership from from our team members.
But also because we are able to grow our business and attract talent. So so <unk>. This is cleared in the area of focus for us and we will continue to to go with that the that region overtime.
Thanks that leads to my my next question about.
Your your successes in in hiring and retaining talent can you can you speak Spanish.
It's been a bit of time, explaining how while you're performing in 2023 and what your aspirations are for for this year.
Well I I think you know, creating the best people brand is our number one objective as a company Frederick.
It starts with our people. This is our number one guiding principles are.
Our greatest assets are people in our in our reputation so.
So we're clearly not negotiable.
Negotiable around the steam.
So we continue to invest significantly in our people I think we've we've restocking length on this call around the the the the the the investment that we're making in technology, we talked about the R. P. Today, but we are in best thing and many other <unk> of the company.
We're trying to create a new working environment that is more reflective of the current market condition life is change and we need to adjust as a company. We just cannot stay static. So we have made significant investments.
For instance in real estate.
Next month, we will be opening you know our revamp.
Largest at European.
Office space in London. So so we are making investment in our people to make sure that we create the best working environment, So and that's not gonna stop we feel that that's money well spent and I will continue in 2024.
Thank you very much.
<unk>.
Thank you.
And then I'll take on next question.
This is from the lineup Maxine <unk> some M. B S. Please give a hat.
Hi, good one gentleman.
Max.
Just one quick follow up if I may in terms of the UK market I mean, we've seen some of our competitors in this space showing pretty poor performance. What are you guys doing differently specifically.
I I.
I I think we have very <unk>.
Have a very strong matured organization.
And we have a very strong bench and they're very strong leadership.
Leadership team and.
And we are definitely liked a sector in which we operate right now Max I think.
We are by far in my personal opinion, the leading franchise and proper 10 buildings.
Simon the rail sector W. S b as the reference in the Royal sector.
So in Europe, and elsewhere, and we know how relevant this sector can be in the broader in in the old continent essentially.
And lastly, we have scale we have scale.
And over time, if you look at our performance anemia, or if you go back to the acquisition of there'll be a screen 2012, when the margin whereabouts seven per cent.
We continue to diversify the business, we continue to invest in a company and we continued to increase performance.
And today you look at at our UK performance I mean does that at the margin that more than doubled over the course of the decade. So I think it's a great Testament of your work everywhere it mostly to achieve.
Okay, great. Thank you so much.
Thanks Man.
<unk> and I have a nice further questions at this time <unk> to the speaker, So enticing my Max <unk>.
Well. Thank you very much again, we were extremely pleased with the performance of our quarter and full year 2023, and we look for to updating you going forward at our next quarterly release on that note I would like to wish you a good day and thank you for your invaluable support.
<unk> 2023 bye bye.
<unk>. This does conclude today's conference. Thank you for participating Angie may now disconnect.
Mmm.
[music].