Q4 2023 SNC-Lavalin Group Inc Earnings Call

Operator: Thank you for standing by. This is the conference operator. Good morning and welcome to Atkins Reales' fourth quarter 2023 results conference. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad.

Thank you for standing by this is the conference operator, good morning, and welcome to Atkins reality fourth quarter 2023 results conference call.

As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero.

Operator: Should you need assistance during the conference call, you may signal an operator by pressing star, then 0. I would now like to turn the conference over to Denis Jasmin, Vice President, Investor Relations. Go ahead. Thank you, Javier. Bonjour tout le monde.

I would now like to turn the conference over to Denny Jasmine Vice President Investor Relations. Please go ahead.

Thank you Anne Marie.

Denis Jasmin: Good morning, everyone. And thank you for joining us today. For those dialing in, we invite you to view the slide presentation that we have posted in the investor section of our website, which we will refer to during this call. Additionally, this call is also webcast. With me today are Ian Edwards, Chief Executive Officer, and Jeff Bell, Chief Financial Officer. Before we begin, I would like to ask everyone to limit themselves to one or two questions to ensure that all of you have an opportunity to participate. You are welcome to return to the queue for any follow-up questions.

Good morning, everyone and thank you for joining us today.

For those dialing in we invite you to view the slide presentation that we have posted in the investors section of our website, which will.

Which we will refer to during this call. So this goes also webcast.

With me today are unit words.

Executive Officer, and Jeff Bell Chief Financial Officer.

Before we begin I would like to ask everyone to limit themselves to one or two questions to ensure that all of the puts and takes up space. They are welcome to return to the queue for any follow up questions.

Denis Jasmin: I would like to draw your attention to slide 2. Comments made on today's call may contain forward-looking information. This information, by its nature, is subject to assumptions, risks, and uncertainties, and as such, actual results may differ materially from the views expressed today.

I would like to draw your attention to slide two comments made on today's call may contain forward looking information. This information by its nature is subject to assumptions risks and uncertainties and as such actual results may differ materially from the views expressed today.

Denis Jasmin: For further information on these assumptions, risks, and uncertainties, please consult the campaign's relevant filings on SIDAR+. These documents are also available on our website. Also, during the call, we may refer to certain non-RFRS financial measures. Reconciliation of these amounts to the corresponding RFRS financial measures is reflected in our earnings release and MD&A, which can be found on SIDARplus and our website.

Further information on these assumptions risks and uncertainties. Please consult the company's where they've been it's filings on SEDAR plus. These documents are also available are available on our website.

Also during the call we may refer to certain non as far as the financial measures. We couldnt see a show that these amounts to the corresponding <unk> financial measures are reflected in our earnings release, and MD&A, which can be found on SEDAR plus.

Our website and I'll pass the call over to you in other words, yes. Thank.

Ian L. Edwards: Thank you, Denis. Good morning, everyone, and thanks for joining us today. 2023 was an exceptional year at Atkins Realics and represented a pivoting point for the repositioning of our company. The new brand that we announced last year is synonymous with a dynamic company that is focused on building a strong culture and delivering excellence for our clients. We cap the year off with a robust fourth quarter result that reinforces the substantial demand for our engineering, project management, and nuclear expertise across the globe. We continued to de-risk the company and significantly grew our revenue. Atkins Real Estate Services saw revenue growth of 20% with an organic revenue growth of 18%.

Thank you Jenny good morning, everyone and thanks for joining us today.

2023 was an exceptional year at Atkins reality, but represented a pivoting point for the repositioning of our company.

New brand that we announced last year is synonymous with a dynamic company that is focused on building a strong culture and delivering excellence for our clients.

We kept the euro with a robust fourth quarter results that reinforce the substantial demand for our engineering project management and nuclear expertise across the globe. We continued to Derisk the company and significantly grew our revenues.

That gives me a as services so revenue growth of 20% with an organic revenue growth of 18%.

Ian L. Edwards: Segment-adjusted EBIT to segment revenue ratio was approximately 9%, driven by the robust top-line performance across our businesses. Backlog at the end of the year was approximately $14 billion, and represents another record high for the company. We also continued to successfully add high-quality talent in 2023, indicative of our core purpose and value. Our total headcount increased by 4,200, excluding the impact of the sale of the Scandinavian engineering business.

Adjusted EBIT for the segment revenue ratio was approximately 9% driven by the robust top line performance.

Most of our businesses.

Backlog at the end of the year was approximately $14 billion and represents another record high for the company.

We also continued to successfully add high quality talent in 2023 indicative of our core purpose and values.

Head count increased by 4200, excluding the impacts of the sale of the Scandinavian engineering business.

Ian L. Edwards: Turning to slide four, we're proud of our results last year, as we met or exceeded each of our most recent guidance targets. Of particular significance was our ability to generate positive cash flow during the second half of the year, which exceeded our expectations. Results from the third and fourth quarters offer an indication of the cash flow generation capabilities of our business in 2024 and beyond. From an employee perspective, we are highly focused on continuing to build the best-in-class culture at Atkins Reality. This is paying off, as the measure of our employment engagement grew 300 basis points to 87% at the end of 2023. We were also recognized in several publications, including the Top 50 Employers in the UK for gender equality.

Turning to slide four we're proud of our results last year as we met or exceeded each of our most recent guidance targets.

Particular significance was our ability to generate positive cash flow during the second half of the year.

This exceeded our expectations.

<unk> from the third and fourth quarters offer an indication of the cash flow generation capabilities of our business in 2024 and beyond.

From an employee perspective, we are highly focused on continuing to build the best in class culture that kids <unk>. This is paying off as the measure of our employment engagement grew 300 basis points to 87% at the end of 2023.

We're also recognizing several publications, including top 50 employees in the U K for gender equality.

Ian L. Edwards: We released our 2022 sustainability report in the fall, which highlighted numerous accomplishments against our core purpose of providing a better future for the planet and its people. These include the enhancement of our TCFD framework reporting and our announcement of the Global Parity Alliance, which is focused on advancing equality, diversity, and inclusion. As we take a look back on 2023, our achievements would not be possible without the hard work and dedication of our employees. I am very proud and humbled to lead such an amazing group of talented professionals.

We released our 2022 sustainability report in the fall, which highlighted numerous accomplishments against our core purpose.

Providing a better future for the planet and its people.

These include the elevation of the Tcf deep framework reporting and are announcing of the global parity Alliance, which is focused on advancing equality diversity and inclusion.

As we take a look back on 2023, our achievements would not be possible without the hard work and dedication of our employees I am very proud and humbled to lead such an amazing group of talented professionals.

Ian L. Edwards: Finally, we are introducing our 2024 full-year financial outlook, which Jeff will review in more detail shortly. We anticipate that 2024 will be another good year with continued revenue growth and strong profitability, but with stronger and more consistent positive cash flow generation. Turning to slide five, I want to focus on a few highlights from our fourth quarter. Our Atkins Real Estate Services business reached a quarterly record high with revenues of $2.2 billion.

Finally, we are introducing our 2020 for full year financial outlook, which Jeff will review in more detail. Shortly we anticipate that 2024 will be another good year with continued revenue growth and strong profitability, but with stronger and more consistent positive cash flow generation.

Turning to slide five I want to focus on a few highlights from our fourth quarter.

Our Atkins reality services business reached a quarterly record high with revenues of $2 $2 billion organic revenue growth in segment, adjusted EBIT increased by 25% and 29% respectively.

Ian L. Edwards: Organic revenue growth and segment-adjusted EBIT increased by 25% and 29%, respectively. We achieved another record backlog this quarter, totaling $13.7 billion at the end of the year, a testament to the demand for our services and our ability to continue capturing high-quality wins in our core end markets and geographies. We generated strong net operating cash flow of $273 million in the fourth quarter, driven by continued growth across our Atkins Realist Services businesses and strong working capital management. We ended the year with 1.8 times net debt to Ivid, within our target range of 1.5 to 2 times, and we delivered this result a year earlier than we forecasted when we launched our Pivoting to Growth strategy. We're a little more than two years since the introduction of this strategy, and the results this past year prove that this is working.

We achieved another record backlog this quarter.

<unk> $13 7 billion at the end of the year estimate so the demand for our services and our ability to continue capturing high quality wins in our core end markets and geographies.

We generated strong net operating cash flow of $273 million in the fourth quarter driven by continued growth across our Atkins reality services businesses and strong working capital management.

We ended the year with a one eight times net debt to EBITDA within our target range of one five to two times and we delivered this result, a year earlier than we forecasted when we launched our pivoting to growth strategy.

We are a little more than two years since the introduction of this strategy.

The results this past year proves that this is working.

Ian L. Edwards: It has enabled substantial growth across our businesses and positions as well as further long-term value creation. We have taken measured steps to become a premier fully integrated professional services and project management company. I'm extremely proud of our achievements this year and excited to demonstrate and provide you with an update of our strategy at Investor Day in June. On slide 6, we highlight our backlog growth across our kids' reality services.

It has enabled substantial growth across our businesses and positions us well for further long term value creation.

We have taken measured steps to becoming a premier fully integrated professional services and project management company I'm extremely proud of our achievements this year and excited to prove and provide you with an update of our strategy at the Investor Day in June.

On slide six we highlight our backlog growth across Atkins reality services.

Ian L. Edwards: Our 16% growth in the fourth quarter versus the fourth quarter of last year was driven by key wins across our core engineering services and nuclear business. We continue to capture these key wings across many of the end markets in which we operate, including CanDo Life Extension nuclear work in Romania, airport runway safety work in the U.S., transportation work in the UK, social buildings in Canada, and our recent appointment to plan the world's largest modern downtown in Riyadh, Saudi Arabia. These projects represent just a small component of the vast opportunity pipeline for Atkins Realis in the end markets in which we operate.

16% growth in the fourth quarter versus the fourth quarter of last year was driven by key wins across our core engineering services and nuclear business.

We continue to capture these key wins across many of the end markets in which we operate including can do life extension nuclear work in Romania.

Asphalt runway safety work in the U S.

Transportation work in the UK.

Social buildings in Canada, and a recent appointment to plan the world's largest modern downtown in Riyadh, Saudi Arabia.

These projects represent just a small component of the <unk>.

Last opportunity pipeline for Atkins reality in the end markets in which we operate.

Ian L. Edwards: Turning to slide 7, our engineering services business continues to drive robust organic revenue growth as we witnessed a 27% increase year-over-year in the fourth quarter. Our revenue generation was driven by the continuation of our ability to secure new wins across our geographic scope. Segment-adjusted EBIT margin and segment-adjusted EBITDA over net revenue margin were 9.6 and 16 percent, respectively, during the quarter.

Turning to slide seven our engineering services business continues to drive robust organic revenue growth as we witnessed a 27% increase year over year in the fourth quarter.

Our revenue generation was driven by the continuation of our ability to secure new wins across such geographic scope.

Segment, adjusted EBIT margin and segment adjusted EBITDA over net revenue margin with $9, six and 16% respectively during the quarter.

Ian L. Edwards: We continue to increase our backlog, which now stands at approximately $5.4 billion, representing a 16% increase in growth versus our backlog as at December 31, 2022. On slide 8, we provide further insight into the engineering services growth of each of our core geographies, the UK, the US, and Canada, as well as our other targeted geographies. We continue to see strong demand for our services fuelled by the need to replace aging infrastructure and provide clean, affordable, and secure energy solutions. In the UK and Europe, we continue to capture key windfalls utilizing our end-to-end capabilities, supporting defense, growth through infrastructure, and water facility development. Opportunities for contracts in the development of transportation, digital, and technology projects, in addition to several design and project management projects, remain robust.

We continue to increase our backlog, which now stands at approximately $5 4 billion.

Representing a 16% increase growth.

Versus our backlog as at December 31, 2022.

On slide eight we provide further insights into the engineering services growth of each of our core geographies. The U K the U S and Canada as well as all of the targeted geographies.

We continue to see strong demand for our services fueled by the need to replace aging infrastructure and provide clean affordable and secure energy solutions.

In the U K and Europe, we continue to capture key wins utilizing our end to end capabilities supporting defense growth through infrastructure and water facility development.

Opportunities for contract and the development transportation digital and technology projects. In addition to several design and project management projects remain robust.

Ian L. Edwards: Our foothold in the marketplace, especially our leading edge in the UK, positions us well to capture bigger, higher-revenue projects as our capabilities are recognized across the job market. In the U.S., we're seeing a high volume of work orders as major metropolitan areas seek our services for design and project management. The pipeline of transportation infrastructure projects, in particular, continues to look strong.

Our foothold in the marketplace, especially our leading edge in the U K positions us well to capture a bigger higher revenue projects as our capabilities are recognized across the geography.

In the U S. We're seeing a high volume of workload. This is major metropolitan areas CCAR services for design and project management.

The pipeline of transportation infrastructure projects in particular continues to look strong.

Ian L. Edwards: There is a concerted drive to invest in water infrastructure and renewable energy through the IIJA and the IRA government spending programs, which also benefits. Additionally, we view the minerals and metals market to have strong tailwinds, and our position gives us a competitive advantage and sets us up to capture additional revenue from this industry. In Canada, we strengthened our backlog this quarter through higher quality WEMS and Master Service Agreement renewables with long-standing clients. To deliver a higher backlog, we have been focused on attracting and retaining strong talent. The culture that we are developing remains a valuable attractor to candidates, which has resulted in growing our employee base in Canada.

There is a concerted drive an investing in water infrastructure and renewable energy through the <unk> and they are a government spending programs, which also benefited us.

Additionally, we view the minerals and metals markets have strong tailwind in our position.

It gives us a competitive advantage sets us to capture additional revenues from this industry.

Yeah.

In Canada, we strengthened our backlog this quarter through higher quality wins and Master service agreement renewables.

With longstanding clients.

To deliver a higher backlog.

We have been focused on attracting and retaining strong talent.

The culture that we're developing remains of value valuable attracts two candidates, which has resulted in growing our employee base in Canada.

Ian L. Edwards: Our current client base and pipeline of prospects remains overweight in the energy transition agenda, and our strong history of delivering in the power and industrial end markets continues to help us win new mandates. I'd like now to move to slide 9 and the results of our nuclear business. We continue to demonstrate robust growth, with an organic revenue increase of 22% last quarter compared to the fourth quarter of 2022. Our nuclear backlog is $1.9 billion, which represents a 98% growth versus our backlog as at December 31, 2022. This is driven by new build and refurbishment contracts found during the year and highlights the substantial long-term growth opportunities for our nuclear visit. Operating margin was 15% in the quarter, at the top end of our 13 to 15% target.

Our current client base and pipeline of prospects remains overweight in the energy transition agenda, and a strong history of delivering in the power and industrial end markets continues to help us win new mandates.

I'd like to now move to slide nine and the results of our nuclear business.

We continue to demonstrate robust growth with an organic revenue increase of 22% last quarter compared to the fourth quarter of 2022.

On nuclear backlog is $1.9 billion, which represents a 98% growth versus our backlog adds up.

At December 31, 2022.

This is driven by Newbuild and refurbishment contracts signed in the year and highlights the substantial long term growth opportunities for our nuclear business.

Operating margin was 15% in the quarter at the top end above 13% to 15% target.

Ian L. Edwards: On slide 10, we highlight achievements in each of the nuclear services that we provide. We made exceptional strides in generating new bill contracts during 2023. Our capabilities continue to be recognized across the globe by public sector entities focused on a cleaner energy future. We made a major announcement to the world in November when we introduced our latest reactor design, the 1000 MW Kandu Monarch Reactor.

On slide 10, we highlight achievements in each of the nuclear services that we provide.

We've made exceptional strides in generating new build contracts during 2023.

Capabilities continue to be recognized across the globe by public center public sector entities focused on a cleaner energy future.

We made a major announcement to the world in November when we introduced our latest reactor design.

<unk> megawatt can do Manav reactor, we did this at the World nuclear exhibition in Paris.

Ian L. Edwards: We did this at the World Nuclear Exhibition in Paris. Large-scale nuclear reactors are increasingly sought to decarbonize power grids, produce stable baseload power, and increase energy security. Monarch is the evolution of the proven can-do technology that provides affordable, reliable carbon-free power and has a decades-long global track record of consistent delivery and operational effectiveness. As a follow-up to our Monarch introduction, we announced last week an agreement with AECL to collaborate for the purposes of successfully deploying CanDo reactors in Canada and internationally. As we look across our core markets, we see a continued increase in the pipeline of opportunities for large and small nuclear new builds, both domestically and internationally. For example, in January, the UK government announced it would invest an additional $1.7 billion for early work to continue on the Third World Sea nuclear plan. Another indication of their interest in investing in a more sustainable energy future. Current projects and the pipeline of opportunities for the life extension work remain really robust.

Large scale nuclear reactors are increasingly sold.

To Decarbonize power grids produced stable Baseload power and increase energy security.

Manav because the evolution of the proven can do technology that provides affordable reliable carbon free power.

Decades long global track record.

Consistent delivery and operational effectiveness.

As a follow up to a market introduction, we announced last week, an agreement with ACL to collaborate for the purposes of successfully deploying can do reactors in Canada and internationally.

As we look across our core markets, we see a continued increase in the pipeline of opportunities for large and small nuclear new builds both domestically and internationally. For example in January the UK government announced it will invest an additional $1 $7 billion for early work to continue on the sizable.

Nuclear plant.

Another indication of their intent to invest in the most sustainable energy future.

Current projects in the pipeline of opportunity opportunities on the life extension work remains really robust.

Ian L. Edwards: In Ontario, we continue to actively work on the CanDo life extensions at Darlington and Bruce Power. And in Europe, we are engaged in the engineering, tooling, and procurement for the CANDU retube and refurbishment program at Cerna Voda in Romania. We continue to see a strong pipeline of opportunity for CAMDU Reactor Life Extensions at Home and Abroad. For waste management and decommissioning, we're making further progress on projects in the UK and in the UAE. And in the U.S., we have a strong pipeline of prospects in conjunction with national security administrations, both near-term and long-term growth. The opportunity for Atkins Realis is significant in nuclear, and the demand for our services continues to grow year over year. We are constantly harnessing our capabilities across the globe to be a trusted partner to public entities as they seek to achieve net zero goals.

Ontario, we continue to actively be working on the can do life extensions at Darlington and Bruce power.

In Europe, we are engaged in the engineering tooling and procurement. So they can do reach hoop and refurbishment program at so Nevada in Romania.

We continue to see strong pipeline of opportunities on Cam to react to life extensions at home and abroad.

On waste management and decommissioning, we're making further progress on projects in the U K and in the UAE.

And in the U S. We have a strong pipeline of prospects and condone junction with National Security Administration.

The near term and the long term growth.

Opportunity for Atkins reality is significant in nuclear.

And the demand for our services continues to grow year over year.

We are constantly harnessing our capabilities across the globe to be a trusted partner to public entities as they seek to achieve net zero goals.

Ian L. Edwards: Now moving to slide 11, RONM, and links to businesses. Our O&M segment generated $130 million in revenue during the fourth quarter, relatively in line with our fourth quarter of 2022 as higher revenues from the commencement of a portion of the REM project were offset by the completion of a contract in 2023. Segment adjusted margin was 9.5% and continues to be above the long-range target of 5-7%. Growth was even driven by lower costs and increased efficiencies across several of our countries.

Now moving to slide 11, our O&M and linked some businesses.

Our O&M segment generated $113 million in revenue during the fourth quarter relatively in line with our fourth quarter of 2022 as higher revenues from the commencement of a portion of the Rem project were offset by the completion of a contract in 2023.

Segment adjusted EBIT margin was nine 5% and continues to be above the long range target of 5% to 7% EBIT growth was driven by lower cost and increased efficiencies across several of our contracts.

Ian L. Edwards: Our links on segments saw a 29% year-over-year organic revenue growth in the fourth quarter and ended the full-year revenues 1% higher than 2020. Backlog of $1.4 billion at the end of the quarter was 63% higher than the fourth quarter of last year. Results this quarter, particularly the backlog improvement, highlight the current and long-term growth potential of this business across many of its geographies. We've now completed our strategic review of Lynxon and with our joint venture partner, Hitachi Energy.

Our league links on segment saw a 29% year over year organic revenue growth in the fourth quarter and ended the full year revenues, 1% higher than 2022.

Backlog of $1 4 billion at the end of the quarter was 63% higher in the fourth quarter of last year.

Results this quarter, particularly the backlog improvement highlights the current and long term growth potential of this business across many of its geographies.

We've now completed our strategic review of planning some.

With our joint venture partner with Hitachi energy.

Ian L. Edwards: We continue to be of the view that the market for the supply and installation of electrical substation equipment is attractive and growing as countries look to decarbonize and electrify. LinkedIn is one of only a handful of global suppliers and is well positioned to win work, as evidenced by its success in 2022 in growing both the amount and quality of its backlinks. However, Lynxon's business model for fixed-price installation projects no longer fits with the strategy of the go-forward business of Atkins Reality.

We continue to be able to view the market for the supply and installation of electrical substation equipment is attractive and growing as countries look to decarbonize and electrify.

<unk> is one of only a handful of global suppliers and is well positioned to win work as evidenced by the success in 'twenty, two and growing both the amount and quality of its backlog.

However.

<unk> business model for fixed priced installation projects no longer fits with the strategy of the go forward business of Atkins Rambus.

Ian L. Edwards: And therefore, we have agreed with our partner, Hitachi Energy, that we will look to exit our shareholding in Lynxholme by exploring the sale to a third party, one that can better benefit from the value creation opportunity that the market and Lynk Fund's position represents. We are actively engaged in pursuing this exit with our partners' support, but it's too early to comment on how long a successful exit will take. In the interim, we will continue to work to improve the operational delivery and resilience and capabilities of this business. Moving to Flight 12 and our LSTK projects in Capital B. Commissioning and testing on our Ontario LSTK projects are continuing as, Our backlog decreased this year by approximately 50% to $365 million, primarily representing the REM project, which continues to progress well.

Therefore, we have agreed with our partner Hitachi energy that we will look to exit our shareholding in linked sung by exploring the sale to a third party.

Walnuts embedded benefit from the value creation opportunity that the market linked songs position represents.

We are actively engaged in pursuing this exit without partners support, but it's too early to comment on how long a successful exit will take in the interim we will continue to work to improve the operational delivery our resilience.

Capabilities of this business.

Moving to slide 12, and I'll, rather teekay projects and capital business.

Commissioning and testing on our Ontario warehouse Teekay projects is continuing as planned.

Backlog decreased this year by approximately 50% to $365 million, primarily representing the Rem project, which continues to progress well.

Ian L. Edwards: As we finalize the LSTK projects for our clients, we continue to pursue claims that we believe we are owed, and these discussions remain ongoing with our clients. Turning to our capital business, fourth-quarter EBIT increased by $10 million, or 22%, mainly due to higher dividends received from the ownership of Highway 407 in 2023. It was an inflection point for Atkins' reality.

As we finalize the L. S teekay projects for our clients. We continue to pursue claims that we believe we are owed.

These discussions remain ongoing with our clients.

Turning to our capital business fourth quarter, EBIT increased by $10 million or 22%, mainly due to higher dividends received from the ownership of highway 407.

As we have shown.

In 2023.

It was an inflection point for Atkins relentless.

Ian L. Edwards: We see 2024 as another strong year of growth. We're also expecting strong operating cash flow and earnings delivery in this final year of our Pivoting to Growth strategy. And to have a more effective deployment of our global capabilities locally to our clients, we have implemented a new operational structure. Under the new structure, the formerly known segments, engineering services, and O&M, will be merged and managed by four regions. Canada, United States, and Latin America, United Kingdom and Ireland, and Asia, the Middle East, and Australia.

We see in 2020 for another strong year of growth.

We're also expecting strong operating cash flow in earnest until their freight in this final year about pivoting to growth strategy.

And to have a more effective deployment of our global capabilities locally to our clients, we have implemented a new operational structure.

Under the new structure, the formerly known as segments Engineering services, and O&M will be merged and managed by full regions.

The United States, and Latin America, United Kingdom, and Ireland, and Asia, Middle East and Australia.

Jeffrey Allan Bell: In addition, we have also created a permanent COO office, which will be led by Soho, former head of engineering, and I'm very excited to have Phil in this role to successfully optimize our operating model across the board. This will help us fully harness our capabilities and drive operational excellence on our path to margin expansion. With that, I'll now turn it over to Jeff to discuss our financial results. Thank you, Ian, and good morning, everyone.

In addition, we have also created a permanent.

C O office, which will be led by our so-called former head of engineering services.

And I'm very excited to have served in this role to successfully optimize our operating model across the company.

This will help us fully harness our capabilities and drive operational excellence on our path to margin expansion.

With that I'll now turn it over to suggest to discuss our financial results.

Thank you Ian and good morning, everyone.

Jeffrey Allan Bell: Turning to slide 15, total revenues for the quarter increased 20% to $2.3 billion compared to Q4 2022. Atkins Riala Services revenue totaled $2.2 billion, 24% higher than the same quarter in 2022, or 25% on an organic revenue growth basis. Total segment adjusted EBIT for the quarter was $232 million, significantly higher than Q4 2022, and was comprised of $201 million for Atkins Real Estate Services, $55 million for capital, and negative $24 million for LSDK projects. Atkins Real Estate Services' Adjusted Even Margin was 9.4%.

Turning to slide 15, total revenues for the quarter increased 20% to $2 3 billion compared to Q4 2022.

<unk> services revenue totaled $2 2 billion.

24% higher than the same quarter in 2022 or 25% on an organic revenue growth basis.

Total segment adjusted EBIT for the quarter was $232 million.

<unk> higher than Q4, 2022, and was comprised of $201 million for Atkins Railroad services $55 million for capital and negative $24 million for Atlas Teekay projects.

Atkins reality services adjusted EBIT margin was nine 4%.

Jeffrey Allan Bell: Nearly 40 basis points higher than Q4 2022 and in line with our target range of 8 to 10%. Corporate ST&A expenses from PS&PM for the quarter increased to $35 million, compared to $24 million, mainly due to the company's rebranding expenses, as indicated on our last earnings call. We continue to expect that the remaining one-third of the total rebranding spend of $30 million will be incurred in the first half of 2024. As a result, we anticipate that the corporate SG&A expenses from PS&PM will be approximately $110 million for the full year 2024. The IFRS net income from continuing operations this quarter was $90 million, compared to a loss of $54 million in Q4 2022.

Nearly 40 basis points higher than Q4, 2022 and in line with our target range of 8% to 10%.

Corporate SG&A expenses from <unk> for the quarter increased to $335 million compared to $24 million, mainly due to the company's rebranding expenses as indicated on our last earnings call.

We continue to expect that the remaining one third of the total rebranding spend of $30 million will be incurred in the first half of 2024.

As a result, we anticipate that the corporate SG&A expenses from <unk> P M to be approximately $110 million for full year 2024.

The <unk> net income from continuing operations this quarter was $90 million compared to a loss of $54 million in Q4 2022.

Jeffrey Allan Bell: This was composed of a net income from PS and PM of $46 million and a net income from capital of $44 million. Adjusted EPS from PS and PM for the quarter was $0.45 per diluted share, compared to negative $0.31 in the fourth quarter of 2022. On slide 16, you can see the selected financial metrics for the year. Total revenues for the year increased by 14% to $8.6 billion compared to 2022. Atkins Riala Services revenue totaled $8 billion.

This is composed of a net income from <unk> of $46 million and a net income from capital of $44 million.

Adjusted EPS from <unk> P. M for the quarter was <unk> 45 per diluted share compared to negative <unk> 31 in the fourth quarter of 2022.

On Slide 16, you can see the selected financial metrics for the full year.

Total revenues for the year increased by 14% to $8 6 billion compared.

Compared to 2022.

<unk> services revenue totaled $8 billion.

Jeffrey Allan Bell: 20% higher than the prior year, or 18% on an organic revenue growth basis, above the top end of our most recent outlook. Total segment adjusted EBIT for the year increased by 85% to $766 million, which was comprised of $712 million for Afghanist Riala services, $113 million for capital, and negative $59 million for LSDK projects. Restructuring and transformation costs for the year decreased to $49 million, compared to $83 million in the prior year. We expect these costs to continue to decrease in 2024. Net financial expenses for the year were $186 million, mainly due to higher interest rates.

20% higher than the prior year or 18% on an organic revenue growth basis above the top end of our most recent outlook.

Total segment adjusted EBIT for the year increased by 85% to $766 million, which was comprised of $712 million for Atkins reality services.

$13 million for capital and negative $59 million for LLS Teekay projects.

Restructuring and transformation costs for the year decreased to $49 million.

Paired to $83 million in the prior year.

We expect these costs to continue to decrease in 2024.

Net financial expenses for the year were $186 million, mainly due to higher interest rates.

Jeffrey Allan Bell: We anticipate these expenses to be lower in 2024, largely as a result of lower forecasted debt levels over the coming year. IFRS net income from continuing operations was significantly higher than in 2022 at $287 million; adjusted net income from P.S. and P.M. with $274 million or $1.56 per diluted share. Our income tax rate on our adjusted PS and PM net income for 2023 was approximately 19%. We expect this rate to be higher in 2024, closer to the Canadian statutory income tax rate of 26%, driven by a number of changes, including the expectation that Canada will be subject to the Pillar 2 Global Minimum Tax Rules from January 1, 2024.

We anticipate these expenses to be lower in 2024, largely as a result of lower forecasted debt levels over the coming year.

<unk> net income from continuing operations was significantly higher than in 2022 and $287 million.

Adjusted net income from <unk> and PM was $274 million or $1 56 per diluted share.

Our income tax rate on our adjusted <unk> net income for 2023 was approximately 19% we.

We expect this rate to be higher in 2024 closer to the Canadian staff.

<unk> income tax rate of 2020 of 26%.

Driven by a number of changes, including the expectation to be subject to the pillar two global minimum tax rules from January one 2024.

Jeffrey Allan Bell: Backlog ended the year at $14.1 billion, 13% higher than at the end of 2022, with strong book-to-bill ratios in the engineering services, nuclear, and links-on segments. And we now move on to slide 17 of free cash flow. Net cash generated from operating activities was strong in the quarter and totaled $273 million, resulting in positive cash generation for the second half of 2023 as expected. The cash flow generation in the quarter permitted us to decrease our debt by $311 million compared to the end of September 30, 2023. This was mainly driven by strong competition.

Backlog ended the year at $14 1 billion, 13% higher than at the end of 2022 with strong book to Bill ratio in the engineering services nuclear and links on segments.

If we now move on to slide 17, and free cash flow.

Net cash generated from operating activities was strong in the quarter and totaled $273 million.

Resulting in positive cash generation for the second half of 2023 as expected.

The cash flow generation in the quarter permitted us to decrease our debt by $311 million compared to the end of September 32023.

This was mainly driven by strong.

Jeffrey Allan Bell: Services, EBITDA delivery, and Working Capital Management. Atkins Real Estate Services generated operating cash flows of $804 million in 2023. After cash taxes, interest, corporate items, and capital, you can see that we generated $477 million of operating cash flow for the year and $66 million after cash used by LSTK projects. If you then add back the federal and provincial charges, remove the capital expenditures, and the payment of lease liabilities, our free cash flow stood at negative $28 million for 2023.

Services, EBITDA delivery and working capital management.

Atkins, we all services generated operating cash flows of $804 million in 2023.

After cash taxes interest corporate items and capital.

You can see that we generated $477 million of operating cash flow for the year and $66 million.

After cash used by Atlas Teekay projects.

If you then add back the federal and provincial charges remove the capital expenditures and the payment of lease liabilities are free cash flow stood at negative $28 million for 2023.

Additionally, we generated $179 million from proceeds of business in investment sales in our engineering services and capital segment, primarily from the sale of our Scandinavian business.

Jeffrey Allan Bell: Additionally, we generated $179 million from proceeds of business and investment sales in our engineering services and capital segments, primarily from the sale of our Scandinavian business. As we expect, continued revenue and EBITDA growth in 2024 from the services businesses and significantly lower cash outflows from the LSDK projects. We anticipate that the net cash generated from operating activities for the company should be in excess of $400 million for the full year 2024. However, we expect the cash generation to be more significantly weighted towards the second half of the year.

As we expect continued revenue and EBITDA growth in 2024 from the services businesses and significantly lower cash outflows from the LLS Teekay projects we.

We anticipate that the net cash generated from operating activities for the company should be in excess of $400 million for the full year 2024.

Note that we expect the cash generation to be more significantly we are weighted towards the second half of the year.

We are also anticipating a higher level of Capex for 2024 in the range of $140 million to $160 million as we believe we will be investing in the can do monarch nuclear reactor development.

Jeffrey Allan Bell: We are also anticipating a higher level of CapEx for 2024 in the range of $140-$160 million, as we believe we will be investing in the Can-Do Monarch nuclear reactor development. We believe this investment will lay the foundation for future nuclear revenue growth, as the demand for low-carbon, reliable power generation continues to be a high priority for many governments around the world. With the expectation that the operating cash flow profile of the company will continue to improve in 2024, we remain committed to achieving investment-grade financial metrics but also see the ability in 2024 to begin deploying free cash flow for the benefit of our strategy and our shareholders, as outlined in our Pivoting to Growth capital allocation framework. Moving then on to slide 18 in the balance sheet, with our stable level of gross debt and a significantly increased level of EBITDA in 20 Due to our continuing efforts in cash collection, our day sales at Standing Friends Nearing Services continued to be strong and stood at 52 days at the end of the quarter.

We believe this investment will lay the foundation for future nuclear revenue growth as the demand for low carbon reliable power generation continues to be a high priority for many governments around the world.

With the expectation that the operating cash flow profile of the company. We will continue to improve in 2024, we remain committed to achieving investment grade financial metrics, but also see the ability in 2024 to begin deploying free cash flow for the benefit of our strategy and our shareholders.

In our pivoting to growth capital allocation framework.

Moving then on to slide 18, and the balance sheet with a stable level of gross debt and a significantly increased level of EBITDA in 2023, our leverage ratio decreased to one eight times in our targeted range of one five to two times a year earlier than our original 2022 to 2000.

2040 guidance.

Due to our continuing efforts on cash collection, our days sales outstanding for engineering services continued to be strong and stood at 52 days at the end of the quarter.

I'd like to now turn to my final slide Slide 19, and summarize our 2020 for outlook.

Given our robust backlog and strong pipeline of opportunities, we are expecting an organic revenue growth rate between 8% to 10% for the engineering services regions and between 12 and 15% for our nuclear business compared to 2023.

We are also expecting that the engineering services region segment adjusted EBITDA to net revenue margins will be between 15 and 17% while the nuclear segment adjusted EBIT margin should remain in the range of 13% to 15%.

Jeffrey Allan Bell: I'd like to now turn to slide 19, and summarize our 2024 outlook. Given our robust backlog and strong pipeline of opportunities, we are expecting an organic revenue growth rate between 8-10% for the engineering services regions and between 12-15% for our nuclear business compared to 2023. We are also expecting that the engineering services region's segment-adjusted EBITDA to net revenue margins will be between 15 and 17 percent, while the nuclear segment's adjusted EBIT margin should remain in the range of 13-15%.

And we do expect similar to 2023 that our cash flow and profitability will be more weighted towards the second half of the year.

With that I'll now hand, the presentation back to Ian.

Thank you Jeff.

I'm extremely proud of our accomplishments in 2023.

We had a great year with key wins across the businesses in all of our core geographies.

Our record backlog highlights our long runway for growth and a significant demand for our services.

As public entities drive change through clean secure energy and replace aging infrastructure. They will continue to think about ken's realized that trusted partner.

Ian L. Edwards: And we do expect, similar to 2023, that our cash flow and profitability will be more weighted towards the second half of the year. With that, I'll now hand the presentation back to Ian. Thank you, Jeff.

Most importantly, we have a strong dedicated and growing workforce that helps us achieve our goals.

So every day for their loyalty diligence.

Providing to the world expansive capabilities of Atkins, regardless.

Ian L. Edwards: I'm extremely proud of our accomplishments in 2023. We had a great year with key wins across the businesses in all of our core geography. Our record backlog highlights our long runway for growth and a significant demand for our service. As public entities drive change through clean, secure energy and replace aging infrastructure, they will continue to think of Atkins Realist as their trusted partner.

And our new organizational structure well it is bring all of these global capabilities locally to our clients and our new brand highlights a fresh identity as a dynamic and transformed organization.

We look forward to providing you with more details of the long term outlook at our Investor day in Toronto in June and we hope that you can join us for that.

So with that let's open up for questions.

Operator: Most importantly, we have a strong, dedicated, and growing workforce that helps us achieve our goals. I'm thankful every day for their loyalty, diligence, and providing the world with the expansive capabilities of Atkins Reactor, and our new organizational structure will let us bring all these global capabilities locally to our clients, and our new brand highlights our fresh identity as a dynamic and transformed organization. We look forward to providing you with more details of the long-term outlook at our Investor Day in Toronto in June, and we hope that you can join us for that. So with that, let's open up to questions. Thank you. Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad.

Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.

Well hear a tone.

Knowledge and your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw. Your question. Please press Star then two we will pause for a moment as callers join the queue.

Our first question comes from Michael <unk> of Scotiabank. Please go ahead.

Hey, good morning, guys.

Truly in all of these.

So nicely done.

I wanted to maybe start with the yellow SDK just to square a few items.

Maybe just comment on the reasons why theres, a limit or a higher loss there this quarter.

The drivers behind the increase in the backlog and lastly.

You know, whether we should think about velocity there should wrap up largely in 2024.

Sure sure and there was a slightly.

Michael Tupholme: You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any key. To withdraw your question, please press star, then two. We will pause for a moment as callers join us. Our first question comes from Michael Dumet of Scotiabank. Please go ahead. Hey, good morning guys. Truly in awe of these results; so nicely done. I wanted to maybe start with the LSDK just to square away a few things.

Slightly higher loss in Q4 than the run rate that we've been having through the year, but nothing nothing has really changed I mean, what we said.

In 2022 that the projects.

And Ontario were physically complete.

The remaining works on those two challenging projects were mainly an engineering services and administration type.

<unk> of work.

It is the case.

We have flattened.

Unknown Speaker: Unknown Speaker Maybe just comment on the reasons why there's a little bit of a higher loss there this quarter. You know, the driver behind the increase in the backlog. And lastly, you know, whether we should think the losses there should, you know, wrap up largely in 2024. Show. Sure, and there was a slightly higher loss in Q4 than the run rate that we've been having through the year, but nothing's really changed.

As we call it got to the end of 2023 is it actually the opening of those to railways has moved back and it's moved back.

For a multitude of reasons many of which are.

The.

The choice of the customers, we don't decide when they go into operation but.

But we have to close everything out on the job, including all the paperwork testing and commissioning and that that additional.

Ian L. Edwards: I mean, what we said at the end of 2022 that the projects in Ontario were physically complete, and that the remaining works on those two challenging projects were mainly in engineering services and administration type of work was the case. But what we have found, as we call it, got to the end of 2023, is that actually the opening of those two railways has been moved back. And they're moved back for multitudes of reasons, many of which are the choice of the customers. We don't decide when they go into operation.

<unk>.

Loss within Q4 is a forecast of where we now believe that those projects will go into service and our forecast of all the costs that we'll need to complete those jobs.

We are now very focused and will be.

Recovering all of those as we've always said, we believe that the issues that we face.

Through Covid is another kind of.

Non contractual.

Obligations that we had to face these challenges.

Recoverable losses.

We need to continue to pursue those.

Ian L. Edwards: But we have to close everything out on the job, including all the paperwork, testing, and commissioning. And that additional, That loss within Q4 is a forecast of where we now believe that those projects will go into service and a forecast of all the costs that we will need to complete those jobs. We are now very focused, and will be on recovering our loss.

If you look at the outlook, we've said that we will incur an overhead cost running through 24 of approximately $10 million a quarter. So that's how we see it but largely speaking.

What we said a year ago has played out as we expected.

We still have the Rem project, which is always progressed very well on almost all of the backlog now.

Ian L. Edwards: As we've always said, we believe that the issues that we face through COVID and other kinds of non-contractual obligations that we had to face as challenges are recoverable losses, and we will need to continue to pursue those. And if you look at the outlook, we said that we'll incur an overhead cost running through 24 of approximately 10 million a quarter. So that's how we see it. But, largely speaking, what we said a year ago has played out as we expected. We still have the REM project, which has always progressed very well. And almost all of the backlog now that you see is actually REM-based and not on the Ontario projects. Incidentally, I actually spent a day on each of those projects a couple of weeks ago, and they're fantastic projects. I mean, all the stations are complete, and the trains are running.

That you see is actually read based.

Not on the Ontario projects Incidentally I actually spent a day on each of those projects couple of weeks ago.

And that that that's fantastic projects I mean, all of the stations that complete the trains are running actually rode the train end to end on the Chilean project Center.

It's going to be a magnificent asset.

In other words as is the accolades and projects in Toronto.

Thanks Ian.

Just if I move along to the additional disclosures that were provided on slide 24.

You can clearly see that the EBIT margins.

Based on my math more than doubled in the second half versus the first half in Canada.

So just wondering how much of the overall 100 basis points of margin improvement.

Engineering services that you're guiding for in 2000 and for Canada driven versus maybe.

Ian L. Edwards: I actually rode the train end to end on the Trillium projects. And it's going to be a magnificent asset in Ottawa, as is the Eglinton project in Toronto. Thanks, Ian. And then just if I move along to the additional disclosures that were provided on slide 24, you can clearly see that the margin, based on my math, was more than double in the second half versus the first half in Canada. So just wondering, you know, how much of the overall 100 basis points of margin improvement, The Engineering Services that you've been guiding for 24 years, is Canada-driven versus maybe some of the more broad operational excellence initiatives that you're. That's a good question and actually helps me explain how we think about this.

Some of the more broad operational excellence initiatives that you're undertaking.

That's a that's a good question and actually <unk>.

Helps me explain how we think about this so first of all margin expansion is incredibly important to optimizing this business going forward.

We are very focused on.

Doing just that.

We are on an improvement journey.

And.

Our areas of improvement are actually quite specific geographically and business related without many areas of this business that are operating in a very very good margin levels I mean nuclear for example.

As industry best but we have some areas of our business in Canada, as well that you've called out.

Ian L. Edwards: So, first of all, margin expansion is incredibly important to optimizing this business going forward, and we are very focused on doing just that. We are on an improvement journey. And our areas of improvement are actually quite specific, geographically and business-related. We've got many areas of this business that are operating at very, very good margin levels. I mean, nuclear, for example, is industry best.

On an improvement program.

And that improvement program is very targeted around the specifics that we know we need to do differently and those could be profitability Kobe win rates could be the clients.

It could be improvement of our capability in a certain sector.

Ian L. Edwards: But we have some areas of our business, and Canada is one that you called out, that are on an improvement program. And that improvement program is very targeted at the specifics that we know we need to do differently. And those could be profitability, could be win rates, could be clients, it could be improvement in capability in a certain sector, and we're focused on doing just that. I'd probably add another comment, which is that if we have a business that we see cannot be put on an improvement program and get to where we want it to be, we will make decisions around that. And you saw that with the Scandinavian business, and you've now seen that with the Lynx business. So we are very focused on getting to the right place. Thanks very much, Ian. Thank you. Thanks. Our next question comes from Jacob Bout of CIBC. Please go ahead. Good morning.

And we're focused on doing just that.

I'd probably add another comment.

If we if we have business that we see cannot be put on an improvement program and get to where we wanted to be we will make decisions around that and you saw that with the Scandinavian business. You've now seen that we're building some business. So we are very focused on getting to the right place.

Thanks, very much Anne.

Thank you thanks.

Our next question comes from Jacob bout of CIBC. Please go ahead.

Good morning.

Good morning.

Hi.

Couple of questions here just on the.

Organic revenue growth guidance you provided so I guess first in the engineering services, you talked about 8% to 10% for 24.

Fourth quarter was.

Most triple thought.

I guess just trying to understand how much of this is being conservative.

Is it just tougher comps and 24, just maybe a bit more color there would be helpful. And then maybe comment a bit on what you're expecting shaping looks like throughout the year.

Jacob Jonathan Bout: Morning. Had a couple of questions here just on the organic revenue growth guidance you provided. So I guess, you know, first in the engineering services business, you're talking about 8 to 10% for 24. You know, fourth quarter was almost triple that. I guess just trying to understand how much of this is being conservative? You know, is it just tougher comps in 24?

Just on the margin profile decrease as we move through the year.

Yeah, No that's a great question.

And.

Clearly, we put the guidance out there.

It tends to engineering services business and a lot more bullish on the nuclear business at 12% to 15.

We've absolutely had an exceptional year in 2023.

Ian L. Edwards: Just maybe a bit more color there would be helpful, and then maybe comment a bit on, you know, what you expect the shaping to look like throughout the year. Just, you know, the margin profile decreases as we move through the year. Yeah, no, that's a fair question, and, Clearly, we've put the guidance out there at 8 or 10 for the engineering services business and are a lot more bullish on the nuclear business at 12 to 15. We've absolutely had an exceptional year in 2023.

Very pleased with that and very proud of it.

We've got a really consider whether that.

Sustainable long term and obviously, we look very closely at.

At our markets and we look very closely at the back.

And the win rates.

And I think the way that we see our markets that they are being fueled.

By energy transition.

We're seeing that.

A big commitment towards increasing.

Electrical energy grid, particularly with clean energy and affordable energy.

Ian L. Edwards: I'm very pleased with that and very proud of it, but we've got to really consider whether that's sustainable in the long term, and obviously, we look very closely at our markets; we look very closely at the backlog and the win rate. And I think the way that we see our market, that it is being fueled by the Energy Transition, where we're seeing a big commitment towards increasing the electrical energy grid, particularly with clean energy and affordable energy. We're looking at an energy transition, the decarbonization of buildings and transport, which is also fueling the replacement of infrastructure in the U.S., funded by IHAA, and Resilience Work for weather events, flooding, and disaster relief.

We're looking at an energy transition decarbonising of buildings and transport, which is also fueling that replacement that infrastructure in the U S funded by <unk>.

And resilience work for weather events.

Flooding and disaster relief. So so those three things are really driving our markets, but as we see those things driving our markets. We're also seeing.

We have seen in the U K.

A bit of change of focus on government policies in terms of moving away, perhaps from transport to <unk> transition as they refocus their investment in the funds and that budget. So.

So what we're doing here is really considering all of those aspects.

And looking at what we can absolutely deliver.

Ian L. Edwards: So those three things are really driving our markets. But as we see those things driving our markets... We're also seeing, and we have seen in the UK, a bit of a change of focus on government policies in terms of moving away perhaps from transport to energy transition as they refocus their investment and their funds and their budgeting. So what we're doing here is really considering all of those aspects and looking at what we can absolutely deliver through those outlooks that we've put there, and I think we're comfortable that those are very achievable ranges, and obviously, we would be looking to perform at the highest end of those ranges. And then just as far as the question about shaping.

Through those.

Through those outlooks that would put back.

And I think we're comfortable that those are very deliverable range is and obviously, we would be looking to perform at the highest end of those ranges.

And then just as far as the question on the shaping.

As we move through the year.

Little stronger correct, yes.

Yes sure.

Yes, I think I think we would we would expect to see from a revenue perspective, good growth through the through the first half and have that continue into the second half.

I think as Ian said.

Further out in the year, you end up with less visibility into exactly the way projects will shape and so we've factored that into our revenue perspective, and then from a profitability and cash flow perspective, we do see the shape of that similar to what we've seen in the last year or two.

Jeffrey Allan Bell: As we move through the year, I think we would expect to see, from a revenue perspective, good growth through the first half and have that continue into the second half. I think, as Ian said, if we go farther out in the years, you end up with less visibility into exactly the way projects will shape out.

Where it's weighted towards the second half of the year and we expect to see that in 2024 as well.

Okay, and then maybe just as a follow on here just from a geographic mix perspective.

How much variability or are you expecting in 'twenty four if we look at kind of UK Europe versus U S versus Canada.

Jeffrey Allan Bell: So we factored that into our revenue perspective, and then from a profitability and cash flow perspective, we do see the shape of that similar to what we've seen in the last year or two, where it's weighted towards the second half of the year. And we expect to see that in 2024 as well.

Yeah.

Different I mean actually different.

There are different drivers in each of those markets, but we're actually seeing pretty strong growth potential in each maybe for different reasons I mean the.

Jeffrey Allan Bell: Okay, and then maybe just as a follow-on here, just from a geographic mix perspective, how much variability are you expecting in 24 if we look at kind of UK, Europe versus US versus, Yeah, I mean... different. I mean, actually different. There are different drivers in each of those markets. But we're actually seeing pretty strong growth potential in each, maybe for different reasons. I mean, the UK, for example, strong water, strong defense.

The U K for example, strong water strong defense strong nuclear energy transition.

The U S strong resilience strong transportation still replacement of aging infrastructure, and then Canada energy for sure.

The building of the ecosystem around clean energy materials, such as EV batteries, and then transport so it's slightly different in each geography, but we've got a very targeted approach to our strategies.

Ian L. Edwards: Strong Nuclear Energy Transition The US, strong on resilience, strong on transportation still, replacement of aging infrastructure, and then Canada, energy for sure, the building of the ecosystem around clean energy materials such as EV batteries, and then transport. So it's slightly different in each geography, but we've got a very targeted approach to our strategies and our tactics to continue our growth in each. So there is no real difference between each one.

Of tactics to continue our growth and H. So no no no no no real difference in each one.

It's helpful. Thank you very much.

Thank you.

Our next question comes from Yuri Lynk of Canaccord Genuity. Please go ahead.

Good morning, everyone.

Yes, good morning.

Nice quarter.

Oh I'll ask another question on the on the guidance.

Your 2022 to 'twenty 'twenty four.

Ian L. Edwards: Thank you very much. Thank you. Our next question comes from Yuri Lynk of Canaccord Genuity. Please go ahead. Good morning, everyone. Yeah, come on in. 9th quarter.

EBIT margin target for services.

At 10%.

And I'm just curious if your 2024 outlook implies a move outside of that range.

So as Jeff why don't I take take that I think as you saw from our guidance, we're beginning to move that guidance more towards EBITDA to net revenue.

Yuri Lynk: I'll ask another question on the guidance, your 2022 to 2024 EBIT margin target for services, 10%, and I'm just curious.

With respect to the engineering services regions, we have moved that from the original guidance you remember for engineering services, which is 14% to 16% up to 15% to 17%.

Jeffrey Allan Bell: 2024 Outlook implies a move outside of. So it's Jeff. Why don't I take that? I think, as you saw from our guidance, we're beginning to move that guidance more towards EBITDA to net revenue. And with respect to the engineering services regions, we have moved that from the original guidance, you remember, for engineering services, which was 14 to 16%, up to 15 to 17%. And so we definitely see an opportunity, as Ian said, to continue to drive margin improvement. And indeed, if you look at some of the breakdown that we have on slide 24, which the previous caller referenced, you can see that some of our regions are at or slightly above on the EBIT to gross revenue basis, at or above the top end of that range. So I think we'll continue to see that in 2024, with some of the regions performing at that level.

And so.

So we definitely see an opportunity as Ian said to continue to drive margin improvement and indeed, if you look at some of the breakdown that we have on that slide 24. The previous caller referenced you can see indeed that some of our regions are at or slightly above on an EBIT.

EBIT to gross revenue basis at or above the top end of that range. So yes.

We will continue to see that in 2024 with some of the regions performing at that level others. As Ian has said on an improvement plan. Obviously overall, we would expect a weighted average to continue to improve.

I think what I would add thanks, Jeff I think what I would add to that.

We know exactly is it.

Very granular level.

Ian L. Edwards: Others, as Ian has said, on an improvement plan, obviously, overall, we would expect the weighted average to continue to improve. I think what I would add, thanks Geoff, I think what I would add to that is... We know exactly, at a very granular level, where we need to improve. We've done extensive work looking at customers, looking at geographies, looking at end markets to understand where we need to do something different to get to the place that we intend to be at, and What was necessary to drive this into the business? was to create this Chief Operating Officer's Office, such that we've got this horizontal lens instead of KPIs to drive those improvements. And they're in cost base, it's productivity, it's win rates, it's all sorts of metrics at a fairly detailed level that Phil will spearhead horizontally. And obviously, the accountability vertically on the geographies still remains with our presidents.

Where we need to improve we've done extensive work looking at customers looking at geographies looking at end markets.

To understand.

Where we need to do something different to get to the place that we intend to be up.

And.

What was necessary to drive this into the business was to create this chief operating office as office.

Such that we've got this horizontal lessons and set of Kpis to drive those improvements.

They are in cost base, it's productivity, it's win rates, it's all sort of.

Metrics at a fairly detailed level the fill will spearhead horizontally.

Obviously, the accountability vote.

On the geographies still remains with our presidents, but we know what we need to do and we have a plan to do it I think is the message that I want to give.

Okay. No I was just asking the question on the on the consolidated EBIT margin just to kind of simplify my life because.

Ian L. Edwards: But we know what we need to do, and we have a plan to do it, I think is the message that I want to give. Okay, no, I was just asking the question on the consolidated EBIT margin to kind of simplify my life because you're adding in the O&M segment with Engineering Service. We're mixing net and gross revenues. But, you know, it does look like that.

You know, you're you're you're adding in the O&M segment, which engineer with engineering services.

We're mixing net and gross revenues.

But it does look like the engineering services margin guidance has been taken out because correct me if I'm wrong O&M as a.

More like a 10% EBITDA margin business that you are blending in.

With engineering services, right and Youre coming out with an even higher margin on the other end.

Yuri Lynk: Engineering Service and O&M, We're like a 10% EBITDA margin business that you're blending. Unknown Executive, Dimitry Khmelnitsky, Sabahat Khan, SNC-Lavalin, Yeah, and that's the way we see it as well. I mean, the O&M business. It's been performing well because we've been transforming that business into more of an engineering-led business rather than, you know, a facilities management business. And now it's almost wholly engineering-led. So it really does belong in the engineering services business at the same sort of margin levels. So you're absolutely right.

Yeah, and that's the way, we see it as well I mean, the O&M business.

It's been performing well because we've been transforming that business into more of an engineering led business rather than a facilities management business and now it's almost wholly engineering led so it really it actually does belong in the engineering services business at the same sort of margin levels. So you're absolutely right.

Okay.

Second and last question.

Just your thoughts on on that.

Ian L. Edwards: Second and last question, just your thoughts on the monarch announcement. I think we can all agree that nuclear energy is an industry that moves very slowly. Only one word: playing catch-up.

Mark announcement.

I think we can all agree that the killers.

<unk> is an industry that moves very slowly.

Certainly one where or.

I didn't catch up as it has proven to be quite difficult then.

Ian L. Edwards: This has proven to be quite difficult. I think that that's where you guys are right now. Design. I mean, it's new.

I think that that's where you guys are right now with this design I mean, it's new.

Ian L. Edwards: There are competitors already in the market. So, how does the company move from the conception phase into actually getting licensed with all its safety certificates, lineup, and most likely buyers? Yeah, so, the great advantage that we have with the CanDo technology is that it's been invested in for over seven decades by the Canadian government. And as you know, we bought the rights to the product in 2012 and sold rights to the VIP, although it's still owned by Canada. The Monarch is actually a bringing together of investments that were made before we got the rights to the product. So there was a gigawatt reactor.

There's competitors already in the market.

So how does the.

Hmm.

Move from conception phase into actually getting this thing licensed with all the safety certification.

Not line up with.

Most likely buyers of this thing, which are which are in a.

Ontario.

Yeah. So.

The great advantage that we have.

With the can do technology.

Is that it's been invested in over seven decades.

By the Canadian government.

And as you know we bought the rights to the to the <unk>.

Product in 2012, the sole rights to the IP, although it is still owned by Canada.

The the monarch is actually.

Bringing together.

<unk>.

The investments that were made before we got the rights to the product. So there wasn't a gigawatt reactor it had been through several stages of development and investment we're bringing that back.

Ian L. Edwards: It has been through several stages of development and investment. We're bringing that back. We're adding to it the safety features that are necessary today.

We're adding to it the.

The safety features that are necessary today.

Ian L. Edwards: We're digitizing it, and we're bringing it all together, and actually, the investment in terms of, Unknown Editor, The Daily Show at www.thedailyshow.co.uk is relatively small compared to starting from a blank piece of paper. So it's almost like a no-brainer to do this. We've done extensive research on what we think is the most competitive scale of large nuclear reactors, and we believe it's a gigawatt.

With digitizing it.

And we're bringing it all together and actually the investment in terms of.

What we say so actually bring that to market and get it licensed is relatively small compared to starting from a blank piece of paper. So it's almost like a no brainer to do this.

We've done extensive research.

On what we think is the most competitive scale of large nuclear reactor and we believe it's a gigawatt.

Yuri Lynk: I think further to that, to talk about the domestic market, we know what our customers want in the domestic market, and we need to be ready to deploy it when they need it. And that's what's driving this investment. But as you can see, it's not a big level of investment to get this thing developed on a year-by-year basis. Our timetable, which will depend somewhat on gaining orders domestically, is in the order of three or four years to get this through to licensing. But we would hope that we will be gaining orders and earning revenues even before it's licensed. Does that mean three to four years? Assumption. What might happen if they..., and all.

Further to that to.

To talk about the domestic market, we know what our customers want in the domestic market.

We need to be ready to deploy it when they need it.

And Thats whats driving.

This investment, but as you can say, it's not it's not a big level of investment to get this thing.

Hello.

On a year by year basis.

Timetable and it will depend somewhat on gaining orders domestically timetable is in the order of three to four years to get this through to licensing, but we would hope that we will be gaining orders in any revenues.

Even before it's licensed.

Since that three to four years assumption.

Assumption.

Require that the regulator debuted this.

In evolutionary design and what might happen if they view it.

And all new <unk>.

Fine Mike.

Would it not take long.

Ian L. Edwards: Unknown Speaker: Yeah, no, the regulator is very much part of the whole ongoing process. So you don't you don't develop products and give them to the regulator, and then they do the review. It's a parallel process. So we work in parallel with them to get to the point of licensing, and in fact, we already are doing it. Okay, guys. That's it for me. That's good. Thank you. Our next question comes from Devin Dodge of BMO Capital Markets. Please go ahead.

Yes no.

The regulator is very much part of the ongoing process. So you don't you don't develop products and give it to the regulator and then they do the review is a parallel process.

So we work in parallel with them to get to the point of licensing and in fact, we are already doing that.

Hey, guys. That's it for me thank you.

Just got it thank you.

Our next question comes from Devin Dodge of BMO capital markets. Please go ahead.

Devin Dodge: Thanks. Good morning, guys. Ian, maybe just to follow up on that last question. In your prepared remarks, you talked about that agreement with AECL. Can you just provide a bit of background on why the agreement was needed and the benefits that it should bring to Atkins reality? Yeah, for sure. Festival.

Thanks, Good morning, guys.

Good morning.

And maybe just to follow up on that last question.

In your prepared remarks, you talked about that agreement with ACL.

Can you just provide a bit of background on why the agreement was needed and a benefit that if you bring tack in three hours.

Yeah for sure.

Well first of all.

Ian L. Edwards: We own the rights to the IP, and we needed to be absolutely sure that those rights... And in the way that the agreement is drawn up, remains in perpetuity to Akin's realism and remains accessible and exclusive to ourselves. And we wanted to just revisit the agreement, just because, in any agreement, there's always improvements you can make. And we wanted to make sure we made those improvements, and got full alignment with ACL on the strategy to take the CanDo technology forward before we started investing in the project and the monarch. And we've got that. I mean, I see ACL as a real asset to develop the product and market the product globally and internationally. And indeed, the Canadian government, who ultimately owns the technology.

We own the rights to the IP.

We needed to be absolutely sure.

Those rights.

And the way the agreement is drawn drawn up.

<unk> remains in perpetuity.

Two Atkins rallies.

Remains.

Accessible and an exclusive to ourselves and we wanted to we wanted to just revisit the agreement.

To win any agreement, there's always improvements you can make and we wanted to make sure. We make those improvements got full alignment with ACO on the strategy to take the can do technology forward before we started investing in the projects.

And the monarch.

We've got I mean, I see ACO is a real asset.

To develop the product and market the product globally and internationally.

And indeed, the Canadian government.

Ultimately owns the <unk>.

And allergy so so that was the intent.

Ian L. Edwards: So that was the intent there. And as you saw, we got a good announcement out. We got support for that announcement from the federal government. So we're all pretty much aligned with what we need to do here. Okay, excellent. Okay. And then last night, we saw that the DOE awarded a large cleanup contract to one of your competitors. I think Atkins is on one of the expiring contracts.

And as you saw we got a good announcement out we got the support and the announcement from the federal government. So we're all pretty much aligned to what we need to do here.

Okay excellent Okay and then.

Last night, we saw that the Doa awarded a large contract.

To one of your competitors like Atkins is on one of the expiring contracts.

Ian L. Edwards: We recognize that this type of work is done via consortiums, and it's recognized in your P&L as JV income, but are you able to quantify, you know, how much earnings were derived from the expiring Hanford tank operations contract? Yeah. Was the wind-down of that contract factored into the margin guidance for nuclear in 2014? Yeah, so no, I mean, we're still very comfortable with our outlook. Very comfortable with our growth in nuclear energy with or without that contract. Of course, we're disappointed. I mean, you know, it's a good contract, and we would have liked to have won it.

But we recognize that the type of work is done via consortium, recognizing you've paid out as JV income, but are you able to quantify.

How much earnings were derived from the expiring.

I think it's the Hanford tank operations contract.

Yes.

What was the wind out of that contract factored into the margin guidance for nuclear in 'twenty four.

Yeah. So no I mean, we're still very comfortable with our with our outlook.

Very comfortable with.

With our growth and nuclear with or without that contract of course, we're disappointed.

Good contract.

And we would have liked to win it but we doubled our backlog remember in 2023 and our nuclear business.

Ian L. Edwards: But we doubled our backlog, remember, in 2023 in our nuclear business, which we're really pleased about and gives us that strong kind of confidence about the 2024 outlook. And when you lose these jobs, these are like tier one jobs, whether it's straight to the DOE. But when you lose the tier one part of it, the secondary market opens up in supporting that tier one contract. So we'll now focus on tier two work, we call it, which is, you know, supporting DOE and the winner. So all in all, not a material impact through the year, but disappointing, of course. Okay, good color.

Which we're really pleased and gives us that strong kind of.

Confidence of 2020 for outlook.

And when you lose these jobs these are like tier one jobs.

Whether it's straight to the Doa.

But when you lose the tier one part of it the secondary market opens up.

And supporting that tier one contract. So we'll now focus on tier two work we call it which is.

Supporting actually.

And the winner so all in all.

No material impact through the year.

But disappointed Nichols.

Okay, good color and congrats on the strong finish to the year I'll turn it over.

Devin Dodge: Congratulations on the strong finish to the year. I'll turn it over to you. Thank you. Our next question comes from Chris Murray of ATB Capital Markets. Please go ahead. Yeah, thanks. Good morning.

Thank you okay.

Our next question comes from Chris Murray of ATB capital markets. Please go ahead.

Yeah. Thanks, good morning.

Christopher Allan Murray: Turning back to some thoughts around free cash flow and a couple moving parts on this one. So, first of all, we talked a little bit about the potential sale of Lynchton and the exit of the JV. Just to make sure, Jeff, the $400 million that you're talking about in available cash flow, that doesn't anticipate any proceeds from the JV, does it? And then, along those lines, you know, just in terms of the timing of cash flow, can you talk a little bit about being able to deploy capital and what the timing would look like for an M&A? Sure. So the answer to your first part of the question is no; there's no assumed revenue from potential links on sale or anything else related to that.

Turning back to some thoughts around the free cash flow in a couple of moving parts on this one.

So first of all we talked a little bit about the.

Potential sale of links on the exit of the JV.

Just to just to make sure Jeff.

A 400 million that youre talking about in available cash flow that doesn't anticipate any proceeds from the JV desert.

And then along those lines.

Just in terms of the timing of cash flow can you talk a little bit about.

Being able to deploy capital and what the timing would look like for M&A.

Sure.

So the answer to your first part of the question is no. There is no assumed proceeds from.

Potential links on sale or or anything else related related to that so.

Jeffrey Allan Bell: So that would be in addition to the guidance that we've given. And I think our view is that having reached the level of the balance sheet and leverage metrics that we have at the end of 2023, that's obviously, as I said, in our target range that we had originally forecasted not being there until the end of 2024. We see the natural cash flow generation of the business in 2024 keeping us below that, around or below that 2.0 leverage ratio for us.

Would be in addition to that too.

<unk>.

The guidance that we've given.

I think our view is having reached the level of the balance sheet and leverage metrics that we have at the end of 2023.

That's obviously as I said in our target range that we had originally forecast to not be there until the end of 2024, we see the natural cash flow generation of the business in 2000 2000 for keeping us Bill.

Though that around or below that two point on the leverage ratio.

Ian L. Edwards: And therefore, we think that allows us to open up the potential for small tuck-in or bullpen acquisitions or indeed returns to shareholders. So I think we have the opportunity to access that throughout 2024 when we see the right opportunities.

For us and therefore, we think that allows us to open up the potential for small tuck in or bolt on acquisitions or indeed returns to shareholders.

I think we see the opportunity to access that throughout 2024, when we see the right opportunities.

Okay, and so along those lines I guess, what I'm trying to also think about it.

Christopher Allan Murray: And so along those lines, I guess what I'm trying to also think about is, you know, in terms of kind of beginning tuck-ins, can you talk a little bit about where the pipeline of potential opportunities is right now? I know, in some cases, you talk about, it may not be the acquisition of somebody; it may actually just be setting up a new office. You talked about, like, there's a lot of white space in the US, for instance, to work on. You know, can you just talk about where you think the opportunities are? And for instance, if you did have additional capital, say you could recycle out of something like Lynkstone, does that mean that, as opposed to waiting, maybe for the second half, you could accelerate, you know, some of those opportunities maybe earlier in the year?

Terms of kind of beginning tuck ins can you talk a little bit about where the pipeline of potential opportunities are right now I know in some cases, you can talk about it may not be the acquisition of somebody it may actually be setting up a new office you talked about like there's a lot of white space in.

In the U S for instance to work on.

Can you just talk about where you think the opportunity set is and for instance, if you did have additional capital say you can recycle out of out of something like when.

Does that mean that as opposed to waiting maybe during the second half you could accelerate some of those.

Those opportunities may be earlier into the year.

Christopher Allan Murray: Yeah, yeah, thanks. I mean, very much part of The London Expand Strategy in the U.S., and it was always a strategy that needed organic and inorganic growth, and to talk to your point on the M&A front, we are already focused on Identifying Possible Targets for U.S. M&A. Now, they're small acquisitions in the first instance. We are assuming that we will be able to convert one or two of those this year. It's likely to be in the second half of the year.

Yeah, yeah. Thanks.

Very much.

Part of it.

The London expand strategy in the U S.

And in it.

As always.

Our strategy.

Needed organic and inorganic growth.

And to talk to your.

To your point on the M&A front.

We are already.

<unk> focused on.

Identify and possible targets for U S M&A now.

The small tuck in acquisitions.

The first instance.

We are.

Anticipating that we will be able to convert one or two of those this year, it's likely to be the second half of the year.

Ian L. Edwards: The good thing about the U.S. market is that it's very state-to-state. So, there are a range of companies that do the work that we do. Establish a foothold in further states, and then join all that up with our greater team where we're operating at Tier 1, and land and expand. Ultimately, our goal is to be a top five player in the US with a coast-to-coast business that operates in the engineering services space. Once we have got on to this cycle of M&A and the Corporation for Innovation, okay, that's helpful.

The good thing about the U S market is very state to state.

San said, so there are a range of size.

All companies that do the work that we do and our intent is to.

Establish a foothold and further states and then joined <unk> with <unk>.

Greater team.

We're operating at <unk>.

London expense.

Ultimately.

Our goal is to be a top five player.

In the U S with our coast to coast business that operates in the engineering services space.

One three.

Got onto this cycle of M&A.

<unk> capability and ensure that we can integrate successfully.

Christopher Allan Murray: And then my other question, just looking at the breakdown, I'm looking more at the detail in the MD&A. Uh, you know, to answer an earlier question, Canada does really stick out, um, in terms of the engineering services margins being substantially lower than the rest of the regions. And, you know, I guess a couple pieces of this, you know. One is, was there something, you know, kind of weird, like kind of a one time or a particular project that was giving you issues in Canada that maybe we didn't notice because of the way the reporting was happening?

We will continue to do that.

An increasing amount of scale, but we really do want to take a step by step approach to it but we actually want to get on with it this year.

The funds that are now.

Forecasted to be available.

Okay. That's helpful and then my own.

A question just looking at the breakdown I'm looking more at the detail in the MD&A.

I think to an earlier question, Canada, it doesn't really stick out.

In terms of the engineering services margins.

Deemed substantially lower than the rest of the regions and.

I guess a couple of pieces to that one is there was there something kind of weird, but kind of one time or a particular project that was giving you issues in Canada.

We didn't notice because of the way the reporting was happening.

Ian L. Edwards: And then I guess, maybe just to elaborate a little more on your comment about, you know, trying to fix things or in the office of the COO, um, you know, what exactly is it that you think that needs to happen in Canada to get that to, you know, what you would think would be a peer-type margin or even a margin profile somewhere similar to the rest of the business? There are a number of things. I wouldn't be able to put my finger on one sort of specific big sort of item that needed fixing in Canada.

And then I guess, maybe just to elaborate a little more your comment about trying to fix things and the opposite of the CLO.

What exactly is it that you think that needs to happen in Canada can get that.

You would think peer type margin or even a margin profile somewhere similar to the rest of the business.

There's a number of things.

I wouldn't be able to put my finger on one specific big sort of item.

Was that needed fixing and Canada, there is a number of things.

Ian L. Edwards: There's a number of things, and I'll share a couple of them. Cost-based is always important, and we've reorganized the business. You can see now that we've got a dedicated president that looks after all the business in Canada under Stephanie Ballancourt. The type of work and the customers, we were doing a lot of really small jobs at low profitability, and moving from that to focus on larger opportunities that we see in the market takes a bit of time because you've got to burn off the backlog that you already had, which is low-profitable work, and replace it with better quality We're very much in progress with that, and the plan is going very, very well on that. Productivity, I mean, getting the business up to the same productivity levels as our other businesses, making sure that the staff and the people have got the right capabilities and support.

Yes.

I'll share a couple of them cost base as always.

But important.

We've reorganized the <unk>.

Business you can see now that.

We got a dedicated president that looks after all of the business in Canada are under Stephanie <unk>.

The type of work and the customers we were doing a lot of really small jumps at low profitability.

Moving from that to <unk>.

Focus on larger opportunities that we see in the market. It takes a bit of time, because you're going to burn off the backlog that you already had which is low profitable work and replace it with better.

Quality backlog, we're very much in progress with that and the plan is very it's gone very very well on that.

Productivity I mean, getting the business up to the same productivity levels of.

The business.

Making sure that the.

The staff and the people.

Got the right capabilities and support so no one thing, but we know we're going to get where we need to.

Ian L. Edwards: So, no one thing, but we know we're going to get where we need to. Okay, that's helpful. Thank you very much. Thank you. Thank you. Our next question comes from Michael Tupholme of TD Securities. Please go ahead.

Okay. That's helpful. Thank you very much.

Thank you.

Our next question comes from Michael to Palm of TD Securities. Please go ahead.

Thank you just maybe to pick up on that last question about the margin improvement expectation you talked about productivity can you talk about how you are positioned from a head count perspective too.

Michael Tupholme: Thank you. Just maybe to pick up on that last question about the margin. Unknown Speaker.

Unknown Speaker: Thank you. Thank you for working through the very significant backlog you have. Are you still in hiring mode here, or do you feel like you've got, for the most part, got the talent you need and really there is an opportunity to leverage product? We thank you, yeah, thanks for the question. I mean, talent and our people are everything.

You have to work through the very significant backlog you have.

Are you still.

In hiring mode here or do you feel like you've got the for the most part got the.

The talent you need and really there is an opportunity to leverage productivity gains.

We thank you again, thanks for the question.

Talent and our people are represent.

Ian L. Edwards: I mean, we are a people business, and we cannot drive organic growth without being able to attract the top talent. We've focused on culture and our Employee Value Proposition going back four or five years, and we've developed, I think, a world-class employee experience, and things like our purpose and our values and our approach to ED&I are real differentiators for younger people. We are able to bring in the talent that we need to drive the business. I mean, bringing in or achieving a headcount growth of 4,200 people in 2023 is a combination of. Lowering our turnover rate, which is constantly decreasing, and having that value proposition for employees and building the culture where they want to join.

I mean, we are a people business and we cannot drive organic growth without being able to attract the top talent.

We've focused on culture, and our employee value proposition going back four or five years ago.

Sure.

And we do follow ups, Iceland, a world class employee experience.

And things like our purpose and our values and our approach to Eni.

Real differentiators for younger people.

We are able to bring in the talent that we need to drive the business.

I mean, bringing in or achieving our head count growth of 4200 people in 2023.

It's a combination of.

Lower.

Turnover rate, which is constantly reducing and having a value proposition for our employees and building the culture, where they want to join us.

Ian L. Edwards: So we will continue to grow our headcount organically. It's absolutely essential for growing the company. Luckily, the way that we do this is a combination of early career people; 2,000 people from graduate and universities joined us in 2023. We can put them to work very quickly, and they're profitable, and they produce revenues for us.

So we will continue to grow our head count organically.

And.

It's absolutely essential to growing the company.

Luckily what the whether we do this is a combination of early career people.

2000 people from graduates and universities joined us in 2023, we can put them to work very quickly.

Profitable.

Revenues for us.

Ian L. Edwards: And we add to that capable and experienced people that also generate revenues for us very quickly. So I think it's an important part of our whole story. I think the other thing I'd add to that, Ian, is that we monitor utilization and productivity and match the people that we're bringing in very much by region and sub-region and customer and market so that, you know, the growth that, as you say, we've been very successful in delivering that backlog is very appropriate, you know, in each of the different regions and geographies so that, you know, we're not building up people Second question, just circling back on the LSTK.

Add to that capable and experienced people that also generate revenues for us very quickly. So so I think it's an important part of our whole story.

I think the other thing I would add to that unit is that we monitor utilization and productivity and match the people that we're bringing in very much by region and sub region and customer end markets.

The growth that as you say, we've been very successful that we've needed to deliver that backlog is very appropriate in each of the different regions and geographies so that yes.

So we're not building up people in areas, where we have less work focus where we've got the most work to be able to do.

Okay. That's helpful. Thank you second question.

Back on the <unk> TK.

Michael Tupholme: Projects Area, I think you were asked this earlier, but I'm not sure if I caught the answer, the increase in backlog that you saw sequentially, is that also tied to your explanation about the delays in some of these projects? If you could just help clarify what drove that exactly. And I guess the other question or the follow-on would be... How do you see that backlog evolving over the course of 2024 as we move through? Yeah, so Jeff, why don't I take that one?

Projects area.

I think you were asked this earlier, but I'm not sure if I forgot to answer the increase in backlog that you saw sequentially.

Is that also tied to your explanation about the delays in some of these projects.

If you can just help clarify what drove that exactly.

And I guess, the other question or the follow on would be.

How do you see that backlog evolving over the course of 2024.

As we move through the year.

Yes, so as Jeff why don't I take that one so yes, we did see a bit of an increase in backlog and that really comes as Ian says from with our clients re forecasting out the completions, particularly of the two Ontario projects here in 2024 and rent.

Jeffrey Allan Bell: So, yes, we did see a bit of an increase in backlog, and that really comes, as Ian says, from our clients re-forecasting out, you know, the completions, particularly of the two Ontario projects here in 2024 and REM. And, you know, as a part of that, there's simply, you know, a view that there's some more work to do than there would have been at the end of Not a material amount of work, and as Ian said, it doesn't extend the timeline in any material way, but that's, you know, that's a big part of what drove the, you know, slight increase in backlog at the end of the year. But it is, you know, largely REM, because, as Ian says, we're down to final testing and commissioning documentation, training drivers, you know, and, you know I think there was a second part to that question, Michael. Did I answer the second part?

As a part of that there is simply a view that there is there is some more work to do.

And then it would have been at the end of the previous quarter not a material amount of work and as Ian said it doesn't extend.

The timeline in any in any material way, but that's that's a big part of what.

<unk> drove.

The slight increase in backlog at the end of the year, but it is largely ramp because of the intense we're down to final testing and commissioning documentation training drivers.

And that's that.

That has a relatively small component of the of the overall total.

I think there was a second part of that question Michael did I answer the second part.

Jeffrey Allan Bell: Not exactly. The second part was just related to how we think about that. Progressing as you move through the year, like... Yeah, so, uh, sorry. Yeah, so I think in terms of, you know, we would look to have that backlog largely done by the end of the year, the anticipation is that both Atrillium and Eglinton would be handing those over to the clients this year, and I think, as REM itself has said, they're expecting to be, you know, largely construction Okay, so just, does that then mean that as far as the 10 million... Hoola, loss that you talked about earlier over the course of 2024, does that, as we look to 2025, should we essentially assume that that loss is no longer there? Okay. I think I just said in the last answer that a lot of that is overhead cost to pursue our recoveries in claims and the like, as well as supporting the ongoing jobs. That will go down. I wouldn't say it was zero in 25.

Not exactly the second part was just related to how we think about that.

Progressing as you move through the year.

Yes.

<unk>.

Yes, so I think in terms of we would look to we would.

Look to have that backlog largely done by the end of the year.

The anticipation is that both the trillium in eglinton, we'd be handing those over to the clients this year and I think as remedies.

Itself has said, they're expecting to be largely construction complete by the end of this year as well.

Okay. So just does that then mean that as far as the 10 million per quarter loss that you talked about earlier over the course of 2024 does that.

As we look to 2025 should we essentially assume that that losses, there is no longer occurring at all in 2012.

I think as I said in the Alaska Alaska.

A lot of that is overhead cost to pursue recoveries and claims and the like as well as supporting the ongoing jobs. So.

That will reduce.

I wouldn't say to zero and 25, but it will be less.

Michael Tupholme: But it'll be less because we'll be down to just really trying to recover the loss. I mean, and I would still hope that we can negotiate this at some point and see that coming in. Okay, thanks very much. Thank you. Our next question comes from Maxim Sytchev of National Bank Financial. Please go ahead.

Because it will be down to just really hum.

Trying to recover the loss I mean, and I would hope still that we can negotiate this at some point.

You can see that coming in.

Okay. Thanks very much.

Okay.

Our next question comes from Maxim <unk>.

National Bank financial please go ahead.

Hi, good morning, gentlemen.

Good morning.

Maxim Sytchev: Most questions have been asked, and I just have a couple of cleanups. Ian, if you don't mind maybe talking a little bit about your Middle East business now that it has crested $1 billion in gross revenue. I was just wondering how you're thinking about some of the risk profile for that part of the business.

Most questions have been asked.

Couple of quick cleanups.

If you don't mind, maybe talking a little bit above.

A bunch of middle East business not been requested a $1 billion in gross revenue just wondering how you're thinking about some of the risk profile.

The business, maybe color that would be helpful. Thanks, Yes for sure for sure.

Ian L. Edwards: Yeah, maybe any comment that would be helpful. Yeah, for sure. For sure. I mean, you know, The Middle East is booming, frankly.

The middle East.

Booming franchise.

Ian L. Edwards: Demand for services from companies like ours, both in the Kingdom of Saudi Arabia for expansion, but now, reinvestment in the United Arab Emirates is really, really fueling the market. So what we have done is really focused on projects that we see have a sustainable future. So those would be the iconic ones. I'm very heavily committed to projects such as NEON and the downtown of Riyadh and the sort of greening and redevelopment of Riyadh city. Weird Guys

Demand for services from from companies like ours, both in the Kingdom of Saudi Arabia expansion, but now.

Our reinvestment in the United Amarin.

<unk>.

Is really really fueling the market. So what we have done is really focused on projects that we see have a sustainable future.

So those would be the iconic.

Im very heavily commit.

Committed to projects such as Neal.

And in the downtown of rehab.

Greening and redevelopment.

Redevelopment.

<unk> city so.

We hang out.

Ian L. Edwards: One, some very good contracts in that type of work, but we're also now... Rather than continuing to kind of focus on one area, as we're seeing good opportunities come out of the Emirates now, we're kind of looking at the Emirates as well, and we're up to over 10% of our business now in the Middle East, but that's about where we want to be, around about 10%. You know, we don't want to kind of outgrow the Middle East compared to the rest. We're keeping it at a level which is positive and supporting our customers there, but we will sort of keep that kind of at a proportionate level. At a proportionate level, at a level which is positive and supportive of our customers there, but we will sort of keep that kind of at a proportionate level. Okay, that makes a lot of sense. And just two quick cleanups, if I may. In terms of kind of like free cash flow conversion of controlled net income to free cash flow, like 80 to 90%, I mean, that's still kind of the game plan.

One some Barry look very good contracts.

And those type of work.

But we're also now.

Rather than continuing to kind of focus on one area. As we are seeing good opportunities come out of the Emirates now, we're kind of looking at the Emirates as well.

We're up to.

Over 10% of our business now is in the middle East, but that's about where we'd want to be around about the 10%. We don't want to kind of outgrow the middle east compared to the rest of it we're keeping it.

At a level, which is positive.

Supporting our customers.

But we will sort of keep up kind of.

At a proportionate level.

Okay. Thanks, a lot.

Two quick clean ups, if I may in terms of kind of like free cash flow conversion of controlling net income to free cash flow like 80% to 90% I mean, that's still kind of the game plan right.

Jeffrey Allan Bell: Yes, that's correct. Okay, and can you be a bit more precise in terms of timing or... questions?

Yes, that's correct.

And can you be a bit more precise in terms of timing or.

Jeffrey Allan Bell: Yeah, I mean, as I said, Max, I think in terms of timing, we, you know, that's our guidance for the full year. As I said in my remarks, it will be weighted to the second half of the year. You know, so we'd expect to see less in the first half and more in the second half.

How should we think about this.

Yeah, I mean, I think as I as I said, Max I think in terms of timing, that's our guidance for the full year.

As I said in my remarks.

Remarks will.

Will be weighted to the second half of the year.

So we would expect to see less in the first half more in the second half.

Jeffrey Allan Bell: But clearly, you know, year on year, a real step forward in both halves, frankly. Yeah, no, absolutely great to see. And then one last thing in terms of the 4-7 and thinking about potential sort of congestion payments as pricing has gone up. Can you maybe provide any color in terms of how we should be thinking about this, if at all?

But clearly year on year.

We'll step forward.

In Bolthouse frankly.

Yes, no absolutely great to see and then one last thing in terms of the four seven and thinking about potential sale of congestion payments as pricing has gone up.

Can you maybe provide any color in terms of how we should be thinking about this.

If at all.

Yes.

Maxim Sytchev: Yeah, I think my comment to that, Max, I think, you know, broadly, I refer you to what the 407 itself is saying. Clearly, their view is that, you know, while there may be some congestion payments, the, you know, value that comes, and, you know, the need to reflect the fact that there hadn't been a price rise in four plus years was clearly what drove their change in pricing that was implemented at the beginning of February So I'm not sure I'd have anything more to add to that at this point. Okay, but I mean, like NetNet, obviously, there should be a positive impact from kind of, okay, ending it.

Yes, I think I think my comment to that Max I think.

I refer you to what the 407 itself is saying clearly their view is that while there may be some congestion payments.

Value that comes in.

The need to reflect the fact that there hadn't been a price rise in four plus years was clearly what what drove their change in pricing that was implemented.

Yes at the beginning of February so I'm not sure I have anything more to add to that at this point.

Okay, but I mean like net net.

Obviously, the recession will be positive impact from an EBITDA perspective.

Jeffrey Allan Bell: Yeah. Okay, okay, perfect. Thank you so much. Thank you. This concludes the question and answer session. I would like to turn the conference back over to Denis Jasmin for any closing remarks. Great. Thank you very much, everybody. If you have any further questions, please don't hesitate to contact me directly. Thank you very much and have a wonderful day and weekend. Thank you. Bye-bye. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day, www.ncbi.nlm.nz www.thevenusproject.com Unknown Executive, Dimitry Khmelnitsky, Sabahat Khan, SNC-Lavalin, Transcription by ESO. Translation by —

Yes.

Okay. Okay perfect. Thank you so much.

Thank you.

This concludes the question and answer session I would like to turn the conference back over to Denny Schatzman for any closing remarks.

Great. Thank you very much everybody. If you have any further questions. Please don't hesitate to contact me directly. Thank you very much and have a beautiful day and weekend. Thank you.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

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Okay.

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