Q3 2024 AtkinsRéalis Group Inc Earnings Call
Thank you for standing by this is the conference operator, good morning, and welcome to Atkins Rialto since third quarter 2012, Q4 results Conference call. 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.
Speaker Change: <unk> 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 Zero I would now like to turn the conference over to Denise Jasmine Vice President Investor Relations. Please go ahead.
Thank you Jim.
Denise Jasmine: Hello, Good morning, everyone and thank you for joining us today.
But again, we invite you to view the slide presentation.
Denise Jasmine: In the investors section of our website, which we will refer to today during this call.
Denise Jasmine: Today's call is also webcast with me are you in his words changed officer, and Jeff <unk> Chief Financial Officer.
Denise Jasmine: Before we begin I would like to ask everyone to limit themselves to one or two questions. So I'm sorry, that's all of it as well.
Denise Jasmine: Welcome to return to the queue for any follow up questions.
Denise Jasmine: 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.
Denise Jasmine: For further information on these assumptions risks and uncertainties placed on so the company's relevant filings on SEDAR plus these documents are also available on our website.
Denise Jasmine: Also during the call we may refer to certain non <unk> financial measures reconciliation of these amounts to the corresponding <unk>.
Denise Jasmine: Financial measures are reflected in our earnings release, and MD&A, which can be found on SEDAR glass and our website.
Denise Jasmine: Before I pass the call to yeah, I would like to take your questions.
Speaker Change: So let me start with let's say tough boot managing director equity you can start to CIBC, we expect spending to his last quarterly call with US today. Thank you and take up all of your help advice and support over the years and wish you all the best in your retirement and I will pass the call over to gather voice.
Thank you Tony Good morning, everyone and thank you for joining us today.
Speaker Change: I'm going to begin today's call by providing an overview of our performance in the third quarter, our continually growing backlog and the current success and opportunities. We are seeing in our full engineering services regions and our nuclear businesses.
Speaker Change: I'll, then pass it to Jeff to provide more detail.
Speaker Change: Actual results before we open it to Q&A, so let's get started on slide three.
We're entering the final months of 2020 full with continued momentum following another quarter of strong results success. This past quarter. So the highlights the growing demand for our services to address the energy transition and an aging global infrastructure.
Speaker Change: We're encouraged by the steady profitable growth of our services and our nuclear businesses across the majority of the geographies.
Speaker Change: In which we operate.
Speaker Change: Atkins reality services revenue organically increased 14% with segment adjusted EBIT increased 27% to approximately $239 million.
Speaker Change: Engineering services regions revenue organically increased 8% to $1 $8 billion, while nuclear revenue organically grew 35% to $369 million.
Speaker Change: Backlog at the end of the third quarter of 2024 was approximately $16.8 billion, an increase of 35% year over year. Another rental time for Atkins re Alice.
Speaker Change: Results yesterday reflects our purpose built strategy.
Speaker Change: Spending into geographies and end markets with high total returns.
Speaker Change: Nuclear expertise continues to be a distinct competitive advantage as we secure key wins this quarter.
Speaker Change: Have a clear line of sight to substantial near term revenues.
Speaker Change: And we generated over $200 million in operating cash flow this quarter.
Speaker Change: We are helping public and private entities achieved a net zero goals and address the energy trilemma.
Speaker Change: The clean affordable and secure energy solutions.
Speaker Change: Story Cold track record makes us the partner of choice in these endeavors and we're proud to play a role in providing a better future for our planet and its people.
Speaker Change: On slide four you can see the continued progression of our backlog grows across Atkins reality services.
Speaker Change: 35% growth in the third quarter versus last year was driven by key wins across our core engineering services and nuclear businesses.
Speaker Change: And nuclear we secured a life extension contracts at the Quin chat nuclear generating station.
Speaker Change: As discussed in detail about June Investor Day, we are one of the few public companies that can service the entire lifecycle of our nuclear asset from design to decommissioning.
Speaker Change: This new agreement is only one example showcase in the global demand of our nuclear capabilities.
Speaker Change: In the UK and Ireland, we continue to support major capital investments by the government and transportation like the latest technology screening services, we are implementing at Heathrow.
Speaker Change: Our end to end capabilities and engineering services enable us to win in the market, including our one of the worlds busiest airports.
Speaker Change: Turning to slide five.
Speaker Change: Engineering services business at a robust organic top line growth, achieving an 8% increase year over year in the third quarter.
Speaker Change: Revenue generation was driven by the continuation of our ability to secure new wins across our geographic scope.
Segment adjusted EBITDA over net revenue margin was 16, 9% during the quarter.
Speaker Change: And represents an increase of 160 basis points compared to Q3 2023.
Speaker Change: We continued to increase our backlog, which now stands at $12 billion, representing a 17% growth versus a backlog as at September 32023.
Speaker Change: Beginning on slide six we will provide an overview of each of our four regions and their performance in Q3.
Speaker Change: In Canada, we saw year over year organic revenue declined 8% while segment adjusted EBITDA was $35 million, representing approximately 15% margin.
Speaker Change: Gross revenue declined due to the ending of a project, which had a high percentage of flow through revenue, but as you can see the underlying net revenue increased 12% year over year to $226 million and our business in Canada continues to strengthen.
Speaker Change: Backlog increased 23% year over year we.
Speaker Change: We continue to capture key awards across transportation buildings in places power renewables and are increasing our presence in Ontario, and Western Canada.
Speaker Change: In Toronto, we were awarded a key railcar chat and in Quebec, We entered into an agreement for the expansion of the sterile injectable facility in Montreal.
Speaker Change: We are executing on our strategy to Canada.
Speaker Change: Now June Investor day, and we're making meaningful progress on our margin enhancement mandate as we lean into a profitable pipeline.
In the UK and Ireland, we continue to win notable contracts utilizing our end to end capabilities, particularly in defense water aviation and power and renewables.
Speaker Change: Nimble and focused approach.
Speaker Change: I'll laid foundation for our presence in the region and is the leading to outperformance.
Speaker Change: Organic revenue grew 6% versus the third quarter of 2023, while segment adjusted EBITDA grew to $93 million we.
Speaker Change: We witnessed a record high EBITDA margin of 18, 5% this past quarter supported by a gain from a closeout of a major project.
Speaker Change: We saw continued backlog growth during the third quarter to approximately $1 $7 billion, primarily due to new work orders in the water and rail signaling businesses.
We continue to demonstrate that our partners of choice with network rail as we secured a key contract to upgrade a digitized the UK signaling for the next 10 years.
Speaker Change: We also entered into an agreement to renew and hence the infrastructure.
Speaker Change: 6000 miles of track in the east of England.
Speaker Change: Additionally, we've made further progress in expanding our access to the growing water market in the U K with several major framework wins related to the <unk> program.
Speaker Change: Currently announced plans indicate that the water sector aims to increase its investment significantly to 96 billion pounds by March 'twenty Thursday.
The doubling of current levels.
Speaker Change: This will provide.
Speaker Change: Ample opportunity for Atkins rail has to catch up further water projects related to this investment in the U K.
Speaker Change: Our long standing position in the U K as is well aligned to key commitments by the public sector.
Speaker Change: Create a cleaner future.
Speaker Change: We're making meaningful progress on opportunities and trends national renewable projects and plans to upgrade the U K grid.
Speaker Change: We are also trusted advisors across defense as capacity spend is expanding under the orcas Trilateral security partnership.
Speaker Change: Turning to slide eight in the U S and Latin America, we saw continued growth trajectory across many high growth customer end markets.
Speaker Change: Organic revenue grew 11% year over year, while segment adjusted EBITDA increased to $51 million.
Speaker Change: We continue to leverage our expertise in transportation with key wins across Georgia, and Florida in the quarter.
Speaker Change: Our thoughts go out to those impacted by the disruption from Hurricanes Hello.
Speaker Change: Listen.
Speaker Change: We are partnering with FEMA to support recovery efforts in the communities most impacted.
Speaker Change: Q3 backlog increased 7% year over year as we continue to advance our land and expand strategy.
Speaker Change: Priority <unk>.
Prioritize our key clients and leverage our unique differentiators.
Speaker Change: A list of prospects for further contract wins is expanding across geographies within the U S and we believe represents solid opportunities for sustainable growth.
Speaker Change: We will be steadfast.
Speaker Change: Our approach to accelerating our foothold across the U S to ensure that we are winning our share of potential new contracts.
Speaker Change: And we also believe that potential M&A opportunities exist to expand our presence in the regions and end markets, where we have a line of sight to high growth potential.
Speaker Change: In EMEA.
Speaker Change: Revenue grew 33% on an organic basis versus the third quarter of 2023, as we saw higher volume for the buildings in places projects in the Middle East.
Speaker Change: This work also led to a segment adjusted EBITDA of $39 million, representing a 17% margin open net revenue.
Speaker Change: The middle East part of our business has grown materially over the last 18 months and it is the level, we are comfortable with and therefore, we expect to be more moderate in future quarters.
Speaker Change: Total backlog in EMEA grew 16% in the third.
Speaker Change: In Asia, we successfully re secured the formula one work, we have been delivering for the last 10 years enhancing our already strong relationship.
Speaker Change: South Korea, we secured a design engineering and procurement services for a new bio processing product center.
Speaker Change: Okay.
Speaker Change: We have expanded capacity and capabilities in Australia, as we are seeing the pipeline of prospects.
Speaker Change: Celebrate in the power and renewables and defense markets.
Speaker Change: The future is bright in this region.
Speaker Change: There are exciting long term opportunities ahead for our end to end capabilities.
Speaker Change: I'd now like to move to slide 10, and the results of our nuclear business.
Speaker Change: We continue to demonstrate significant growth with an organic revenue increase.
35% in the quarter compared to the third quarter of 2023.
Speaker Change: Nuclear backlog is $3 $2 billion, which represents more than 200% growth versus a backlog as at September 32023.
Speaker Change: Driven primarily by life extension bookings and the can do flight.
Segment, adjusted EBIT grew 18% to $46 million.
Speaker Change: As a percentage of segment revenue segment, adjusted EBIT was 12% in the quarter.
Speaker Change: On slide 11, we highlight the achievements across the nuclear it can do and services portfolios.
Speaker Change: The demand for our expertise in nuclear was emphasized again this quarter as we signed key wins and made continued progress on projects across each of the regions we serve.
Speaker Change: In Canada, we continue to garner support from the public and private sector as we on boarded additional key stakeholders for all Canadians for can do campaign.
Speaker Change: And Ah can do business, we're making excellent progress, particularly on a cam do life extension projects.
And our services business.
Speaker Change: Kindred Atlas was selected in the U S to devote the pre concept is that the type one entities fusion pilot plant in Tennessee.
Speaker Change: We also see increasing opportunities to work with other technology providers for <unk> development.
Speaker Change: The U K.
Speaker Change: And so in agreement with GE Hitachi to support the delivery of its small modular reactor technology.
Speaker Change: We are continuing to provide newbuild support at Hinkley point C and size of the sea and decommissioning services at Sellafield.
Speaker Change: Our success is being recognized by third parties.
Speaker Change: You can see on the slide we have recently received a number of awards in the U S and in the U K.
Speaker Change: Turning to slide 12, I want to further highlight the near term and long term can do revenue opportunities within our nuclear business.
Speaker Change: As you can see through our backlog grows and contract wins over the past couple of years.
Speaker Change: Customers are continuing to recognize on nuclear expertise.
Speaker Change: This is translating into revenues they were booking today.
Speaker Change: While also building a robust backlog of.
Speaker Change: Strong future revenues for Atkins rabbits.
Speaker Change: As I mentioned earlier, we secured a 30 year life extension contract for two can do reactors at the quick chat nuclear generating station.
Speaker Change: In addition, we continue to make good progress on new build.
Speaker Change: Billed contract negotiations to see three and see for southern Nevada.
Speaker Change: In Romania.
Speaker Change: When signed.
Speaker Change: It will mark the return of Cam do reactors to the world nuclear market.
And discussions continue on the next phase of our Senate voted Seawall life extension project.
Speaker Change: Our current success in Canada and in Romania highlights the opportunities for can do support life extensions across the globe today.
Speaker Change: We are also currently building the technology from mono nuclear reactor.
Speaker Change: Tandem we're in discussions with public entities about building new reactors to help support net zero goals.
Speaker Change: These potential contracts represent a massive opportunity for our business and could deliver significant growth over the next 10 years and beyond.
Speaker Change: We are one of the few public companies with the expertise and capabilities to service the entire lifecycle of a nuclear asset.
Speaker Change: And through this we can build a backlog that will grow overtime and providing rich.
Speaker Change: Revenue for decades to come.
Speaker Change: The projects you see on this slide are representative of today's winds.
Speaker Change: But offer a glimpse into the future potential of this business.
Speaker Change: Our growth in key wins today.
Speaker Change: <unk>, the demand and potential of our nuclear prowess across the globe.
Speaker Change: Now moving to slide 13, and a linked somehow S teekay and tactical businesses.
Arlington linked songs segment saw 32% year over year organic revenue growth in the third quarter maintain.
Speaker Change: Maintaining its strong volume momentum from the first half of the year and realized 310 basis points of EBIT margin expansion.
Speaker Change: Backlog of $1 6 billion at the end of the third quarter was 32% higher than the third quarter of last year.
Speaker Change: Demand for our transmission and distribution services remains robust.
Speaker Change: Oh, no that's teekay projects, the commissioning and testing on our two Ontario projects are running as planned in fact, the trial running of the Trillium line just took place and the result was a success.
Speaker Change: We expect substantial completion of this project eminently.
Speaker Change: The total backlog decreased 38% to $190 million at the end of the third quarter, primarily reflecting the Rem project, which is progressing well.
Speaker Change: As we finalize the honesty take projects for our clients. We continue to pursue claim recoveries that we believe are out there.
Speaker Change: These discussions remain ongoing with our clients.
Speaker Change: On capital, we received $15 million of dividends from highway 407 in Q3 as traffic patents continue to improve year over year.
Speaker Change: Subsequent to quarter close we received an additional $47 million in dividends in the fourth quarter.
Speaker Change: There are also.
Speaker Change: No updates to provide as it pertains to our planned.
Speaker Change: The position of our interested links and highway 407, we will update you when we have more information in the future.
Speaker Change: So with that I'll now turn it over to Jeff to discuss the financial highlights.
Jeff: Thank you Ian and good morning, everyone.
Turning to slide 15, total revenues for the quarter increased 11% year over year totaling $2 $5 billion.
Jeff: Revenues from professional services and project management increased by 12%, which included a revenue increase of 15% for our services business and a decrease of 42% in Alice Teekay projects.
Speaker Change: As Ian mentioned, the engineering services regions revenue organically grew by 8% this quarter compared to Q3 2023.
Speaker Change: Year to date organic growth to 12, 6%.
Speaker Change: We've taken a prudent approach for forecasting revenue in the fourth quarter as close outs of a couple of major projects recently and the particularly strong growth in Q4 2023 could result in relatively flat organic growth in Q4.
Speaker Change: We remain confident in our 8% to 10% revenue growth outlook for the full year and our ability to deliver on our greater than 8% annual organic growth target outlined at our June Investor day.
Speaker Change: Total segment adjusted EBIT for the quarter was $246 million, 25% higher than last year and was comprised of $239 million for Atkins, we added services $25 million for capital and negative $18 million for Ellis Teekay projects.
Speaker Change: Corporate SG&A expenses from P. S. M. P M totaled $27 million in the quarter compared to $47 million last year.
Speaker Change: Q3 last year included a higher expense related to revised estimates on long term employee incentives and the company's rebranding costs.
Speaker Change: We continue to anticipate that the corporate SG&A expenses from P. S. M. P M should be approximately $130 $30 million for the full year 2024.
Speaker Change: But could be around $10 million to $15 million higher if the significant share price increase we've seen recently remains through the end of the year and thereby impacting on our long term compensation costs.
Speaker Change: Net financial expenses for the quarter were $41 million lower than Q3 2023 due.
Due to a lower level of recourse debt and lower interest rates on our variable rate debt, we would expect a similar amount of expense for Q4.
Speaker Change: The effective income tax rate from P. S. M. P. M was approximately 29% in the quarter higher than the Canadian statutory tax rate, mainly due to the geographic mix of earnings and other nonrecurring items.
Speaker Change: As expected our year to date income tax on our adjusted P. S. M. P. M. Net income was higher than last year. We continue to believe that the full year 2024 should be around the Canadian statutory rate of 26%.
The <unk> net income this quarter was $104 million compared to $105 million in Q3 2023.
Speaker Change: But it is important to note that Q3 last year included a $46 million gain on the disposal of the company's Scandinavian engineering services business.
Speaker Change: Excluding this gain the company's net income increased by 76%.
Speaker Change: Adjusted EPS from P M and P. M for the quarter was 63 cents per diluted share a 66% increase compared to 38 cents in the third quarter last year.
Speaker Change: And backlog ended the quarter at a record high level of $17 billion.
Speaker Change: 21% higher than at the end of last year, and 33% higher than at the end of September with a strong increase in the engineering services nuclear Enlink sound businesses.
Speaker Change: We now move on to slide 16, and free cash flow.
Speaker Change: Net cash generated from operating activities was $267 million in the third quarter.
Speaker Change: As expected our services businesses delivered strong cash flows with the improvement compared to the prior year coming from higher EBITDA and improved capital working capital positions.
Speaker Change: And included a sizable advance on a nuclear refurbishment contract.
Speaker Change: The small positive cash inflow from Alice Dk projects. This quarter was mainly due to anticipated cash advances received as the projects are progressing towards that full completion.
Speaker Change: We anticipate that the net cash generated from operating activities for the company should be slightly in excess of $400 million for the full year.
Speaker Change: After capex and payment of lease liabilities are free cash flow stood at $226 million for the quarter.
Speaker Change: Capital expenditures.
Speaker Change: Including development costs for the can new monarch nuclear reactor with $37 million in the quarter in line with our expectations. We continue to forecast full year capital expenditure in a range of $140 million to $160 million as the monarch development continues to ramp up in the fourth quarter.
Speaker Change: With that I'll now hand, the presentation back to Ian.
Ian: Thank you Jeff.
Our revenues are growing.
Ian: Our backlog is building.
Ian: Our margins are improving.
Ian: And we're generating positive operating cash flows.
Ian: We continue to build on our momentum with key wins across our full engineering services regions in our nuclear business.
Ian: That is growing our backlog and providing a line of sight to see.
Ian: Sustainable revenues for years to come.
Ian: General market conditions for our engineering services and our nuclear business remained strong.
Ian: As we continue to support public and private entities and achieving their revolt and power needs and net zero goals.
Our strategic positioning and high growth geographies and end markets is leading to our ability to capture our share in these healthy markets.
Ian: Harnessing operational efficiencies across the company through the work of our C O office.
Ian: All of this is an independent underpinned by the need to service the energy trilemma, an aging infrastructure and without even excited by the scale of our longer term opportunities emerging from these megatrends.
Ian: Our new strategy of delivering excellence and driving growth is built on optimizing the business to drive profitable growth.
Ian: Celebrating our footprint and growing end markets and regions and exploring untapped opportunities across the organization.
Ian: We will continue to do this.
Ian: By utilizing our positive free cash flow to invest organically and inorganically.
Ian: To bolster our position in high growth geographies and end markets.
Ian: So with that let's open it up for questions.
Speaker Change: We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing any gains.
Speaker Change: Draw. Your question. Please press Star then two.
We will pause for a moment as callers join the queue.
Speaker Change: The first question comes from Checkup.
Speaker Change: Checkup boot with CIBC. Please go ahead.
Speaker Change: Good morning, and thank you for your kind words going into retirement.
Speaker Change: My first question is is on margins.
You can take a look at our engineering services.
Speaker Change: At the high end of 'twenty four targets nuclear I think was at the low end, maybe just comment on you know.
Speaker Change: Margins.
Speaker Change: You know what margins are baked into backlog currently and your confidence in.
Speaker Change: And your your three year outlook for 'twenty, five 'twenty seven margin targets.
Speaker Change: Yeah, Thank you and congratulations.
Speaker Change: So yeah, I mean, obviously.
Speaker Change: If we look at the quarter itself.
Speaker Change: Really pleased with the EBITDA net revenue margin of of.
Speaker Change: Six 9%.
Speaker Change: 160 basis points, so on a on a year ago. So so so so that's great.
Speaker Change: But our objective is.
Speaker Change: As we said at the Investor Day.
Speaker Change: Is too.
Speaker Change: Billed through the Chief operating officers office.
Speaker Change: It's a sustainable approach to improvement of margins across the engineering services business.
Speaker Change: And that will take us.
Speaker Change: On a year to year journey.
Speaker Change: So those.
Speaker Change: Margins that we committed to by 2027 of the 17% to 18%.
And the reason I say it like that is because we will see some quarter to quarter variances through the year. As this is you know it's not it's.
Speaker Change: It's not going to be a quarter to quarter linear process, it's going to be a year to year linear process.
Speaker Change: And the reason for that is that the.
Speaker Change: There are some fundamental business improvements that we've got to build in to our engineering services business and those are obviously went in the right work and that's very much in progress.
Speaker Change: We are particularly in Canada.
Speaker Change: <unk> got a whole.
Speaker Change: Better quality of backlog than we would have had two years ago.
Speaker Change: You know, we've done really well in the middle East, but we are conscious that.
Speaker Change: That is high quality work and we are going to maintain.
Speaker Change: That's the level and the middle East the U.
Speaker Change: Okay in the U S are both doing really well on the margin journey. So it's to winning the right work and let the next is the overhead there.
Speaker Change: The business overhead costs and being as optimum as we can be in getting that overhead cost as efficient as possible.
The utilization of our results you know what about key overhead costs is getting in the past utilization out of our people across the planet and we do that by connecting the organization together across geographies.
Speaker Change: This culture of collaboration and we have this culture of sharing across the company that will improve our utilization rates and lastly, it's the technology sense at 4000 very capable people in India, but obviously, there's a significant arbitrage from the wage perspective so.
Speaker Change: Betting not into the business all of those things will give us.
Speaker Change: The 18%, 17% to 18% of committed to now what you will see obviously in Q4 is the target that we will identify for 2025, we've done well this year.
And I think we've got a good incremental improvement this year and we'll continue to do so.
On the nuclear side.
Speaker Change: We've committed to a 12% to 40% range, we believe that's the right.
Speaker Change: Range for nuclear.
Speaker Change: Clearly nuclear was about servicing the market is this phenomenal Renaissance comes upon us and we're focused on growth.
Speaker Change: But not at the expense of margin the margin.
Speaker Change: Be in that range of 12 to 14, so a bit of a long answer, but I hope that helps.
Speaker Change: So maybe just a bit more on the on the nuclear side. So the you know we just announced this too.
Speaker Change: 2 billion contract for the operation maintenance.
Speaker Change: With the U S Department of energy.
Speaker Change: How should we think about margins for both types of contracts versus.
Speaker Change: Some of the rebuild work that Youre doing.
Speaker Change: Jeff Julien Yeah, Jacob it's Jeff.
Speaker Change: So those types of contracts, we're in joint venture with and effectively we get an equity pickup for our share of the net profit from them.
Speaker Change: From those types of contracts. So it's helpful to the margins and we're really pleased with that with that contract and that contract wind.
Speaker Change: Waste decommissioning in the U S is an area of strength for US provides a very stable and long term.
Speaker Change: Financial contribution to the to the nuclear group.
Speaker Change: That contract we've been we've been involved with that since 2016 and great to see will be involved for another 10 years.
Speaker Change: Helpful. Thank you.
Speaker Change: Thanks. Thank you the next.
Speaker Change: The next question comes from Saba Hot Kahn with RBC capital markets. Please go ahead.
Okay great.
Speaker Change: Can you maybe just provide a bit of an update on sort of your strategy in the U S market and quite a bit of color on sort of the guidance, but just how did that was a focus at the investor day, both in terms of sort of your organic growth as well as M&A just maybe some of the green shoots you've been seeing there as well as I think the growth in that region. It's been pretty strong how do you think about maybe lapping that as we head into 2025 and beyond to some details there. Thank you.
Speaker Change: Yeah, Yeah, absolutely I mean, as you know we referred to this as a land and expand strategy.
Speaker Change: And we have a very very deliberate plan to get us into the top 10.
Speaker Change: In the U S.
Speaker Change: And currently we're very strong in the South East and we've opened offices in the northeast and local offices on the West coast, but we really.
Speaker Change: And we've been very much a inorganic.
Speaker Change: Land and expand strategy open until really about a year ago and.
Speaker Change: In about a year ago, we started looking at M&A.
Speaker Change: And we started looking at how do we complement those white space areas. If you like.
Speaker Change: In the west and in the northeast.
And obviously, we're looking for quality companies that can add.
Speaker Change: Value add.
Speaker Change: Connectivity and that capability into our existing kind of business and in the U S. So nothing to announce today on the M&A front, but very very key.
Speaker Change: To secure and some acquisitions to complement the organic growth.
Speaker Change: Drive.
Speaker Change: Now in addition to that when we think about end markets in the U S.
Speaker Change:
Speaker Change: Businesses.
Speaker Change: Really heavy on the department of transport State by State and we would want to continue to grow that geographically.
Speaker Change: There is a good water program in the U S, which recently.
Speaker Change: I would say in an evolving space.
Speaker Change: See great opportunity.
Speaker Change: From from from the water market as water infrastructure needs to be upgraded and that's an end market play that we need to add.
Speaker Change: But all in all we have a clear plan.
Speaker Change: Executing on that plan.
Speaker Change: We're pleased with.
Speaker Change: So 11% double digit growth in.
Speaker Change: In Q3, as you've seen them and we are as I said committed to getting into the top 10.
Speaker Change: Great and then maybe just on the margin side of the story and it provided a little bit of color earlier can you maybe just provide a bit of an update on some of the initiatives you outlined on Investor day on what drives margin improvement through the guidance paradigm, where you are sort of on that journey.
Speaker Change: Yeah, I mean, you know as it is.
Speaker Change: As I've said in the last question. We've got four very very specific areas of margin enhancement through winning the right work through reduction of overhead through improved utilization through the incorporation of the GTC.
Speaker Change: <unk> operating officer fill a hole.
Speaker Change: Taken on the challenge to work with the President's to embed those improvements in the engineering and services businesses regionally, we have a very clear plan with very clear targets.
Kpis that we measure.
Speaker Change: On a quarter to quarter basis on a month to month basis, it's going well.
You will see I guess, the rubber hits the road when we put out a target for 2025 and in Q4 and you will have seen improvement in.
Speaker Change: Sort of 2025, and you will see an improvement in 2024, so the journey will take us to the the range that we put out for 'twenty seven.
<unk>, 17% to 18%.
Speaker Change: We're confident we can land or Jeff I don't know if you would add anything no I think that's right I think.
Speaker Change: It is in one sense early days, but on the other hand, the team and the business has been making good progress and we're already starting to see.
Speaker Change: You know some of the initial works at initiatives starting to flow into our numbers here in the in the back half of the year I mean that optimization of the existing business. This is important towards those growth, where we need to do both.
Speaker Change: And then just one last quick one and obviously a lot of questions out there on what the new administration might do for just kind of the base organic business, but if we look at it from sort of the M&A angle and your engagement with potential targets in the U S. Do you find do you think it's possible people take a bit of a wait and see approach potential sellers.
Speaker Change: Do you think people might want to sell faster.
Speaker Change: The way your perspectives on how bad operating backdrop, or just kind of a change in climate might impact.
Speaker Change: Seller willingness to engage.
Yeah, I mean, you know that does it.
Speaker Change: I think there's a high degree of alignment around the industry and that the effect on engineering services businesses is pretty neutral.
Speaker Change: We've obviously got our own views.
Speaker Change: And we believe it's neutral.
Speaker Change: A couple of key drivers for that and the way, we think about it and the way that we believe that it's neutral first the infrastructure across the United States is aging.
Speaker Change: And they have to upgrade maintain and replace particularly in transport infrastructure, particularly in water infrastructure.
In addition to that.
Speaker Change: Energy security is going to be top of mind.
Speaker Change: Maybe not the journey to net zero as much but energy security for sure and energy security, particularly to fuel the demands of the future. When you think about when you think about electric vehicles. When you think about it.
Speaker Change: The increase in manufacturing is.
Speaker Change: Is going to require more electricity generation, that's going to be grid upgrades, that's going to be more power plants more nuclear so all of that for ourselves we see as.
Speaker Change: We see as positive, but certainly on the engineering services side, I think it's pretty neutral I don't see the IHA a being affected.
Speaker Change: Essentially the Io Ray may come back with something a bit different.
Speaker Change: But it's a really good market very buoyant.
Speaker Change: Okay. Thank you.
Speaker Change: The next question comes from Chris Murray with ATB capital markets. Please go ahead.
Speaker Change: Folks good morning, just maybe turning back to the nuclear and any in that portfolio of opportunities you were talking about you know I know.
Speaker Change: Just allow us a fairly large contract and certainly with some good year over year growth in backlog can you talk a little bit about many more granular the timing of some of those projects like what's your expectation for.
Speaker Change: What do you think you can book loads.
Speaker Change: And particularly on some of the longer tailed stuff I know, we talked a little bit about this at the Investor day, but no I think were thinking.
Speaker Change: Indication was a lot of that was going to be very back end loaded for some of the newer software do you have any sort of color on on timing.
Speaker Change: Backlog growth would be helpful.
Speaker Change: Yeah, and I mean, that's why we put the extra bulge out slides in.
Speaker Change: In the deck today to try to be helpful to put into context, what is the $3 2 billion of backlog that we have at Q3.
Speaker Change: What is what does that represent and what are the opportunities.
Speaker Change: Ahead of that both near term opportunities and maybe longer term opportunities.
So maybe referenced in that slide.
Speaker Change: We were showing here what what is secured in terms of the Darlington and Bruce have been working on for some time, which we're showing what we've secured in terms of the first phase of incentive odor and the first phase of <unk> and <unk>.
Recouping, but on top of that you know there's further phases to come.
Speaker Change: Onset of OTA Walnut Unquote Chen.
Speaker Change: There's also negotiations on place to retool, the we'll sign in South Korea.
Speaker Change: We're very close to concluding the Senate vote of three and four negotiations, which is a game changing new build.
Which would be the first in 20 years Newbuild contract that we will have one and those all of those revenues and backlogs are yet to come pick her inc.
Speaker Change: There's clearly a negotiations ongoing to reach you Pickering.
Speaker Change: Which is a considerable amount of old units that so.
Speaker Change: Obviously, we can't get into specific kind of revenues and dates because a lot of these things that are in negotiation, but we try to be indicative on this slide as to as to when those are coming in I mean as far as the hot topics, we got out there 1.82 billion.
Speaker Change: Our revenues by 27.
Speaker Change: But those were very confident of achieving them now on top of all of that then we've obviously got new builds which are not even on this slide.
Speaker Change: Both domestically and internationally.
Speaker Change: Many conversations.
Speaker Change: Many opportunities.
Speaker Change: We need to secure some saying.
Speaker Change: On the international market, we need to show something on the domestic market.
Speaker Change: That was likely.
Speaker Change: To see something maybe secured a 25, but revenues from that will be slow to start with and then sort of ramp up towards the end of the decade, just to give you a feel for it but I think where we are lucky and why we are differentiated in our nuclear business is are retrieved in business is bringing.
Speaker Change: Real revenues into the business today.
Speaker Change: But we have the same opportunity as other nuclear.
Speaker Change: Oems and the fact that we've got this market ahead of us for tomorrow.
Speaker Change: Okay. That's helpful. Thank you.
Speaker Change: The other question I wanted to ask was about Trillium and I think you kind of mentioned that you thought that the.
Speaker Change: Substantial completion would be imminent in your words did notice in the subsequent events I guess, you're just kind of moving some financing around.
Speaker Change:
Speaker Change: Can you just kind of maybe walk us through what we should expect if you actually believe youre going to get the substantial completion, let's just say by year end, what does that look like in terms of impact on.
Speaker Change: Either either operating costs or.
Speaker Change: Anything else in there and just just.
Speaker Change: Just how we should think that plays into cash flows into 2025.
Speaker Change: Yes.
Speaker Change: Jeff if you can.
Speaker Change: The cash flow side of it.
Speaker Change: As far as the asset itself.
Speaker Change: As we said you know a lot of the costs in a lot of the bid.
The expenditure and the challenge, we had with sort of.
Speaker Change: <unk> 'twenty three because they are in the construction work, but then there's quite a lot of commissioning work a lot of documentation work, which has been going on 'twenty three 'twenty four the finalization of all of this is a trial running period over a certain period of time a sudden.
Speaker Change: Level of Oh reliability with past that that's a pretty major milestone for railway because it's quite complex, but we'll pass that so that ultimately leads to a process of completion substantial completion, we call. It. So we would expect to receive that this year.
Speaker Change: That's kind of then the the assays hand, it over to the to the climate, it's kind of done.
Speaker Change: Yeah, and I think from a cash flow perspective, Chris.
Speaker Change: We would expect to sort of.
Speaker Change: <unk> final accounts hold backs supply chain.
Speaker Change: Through Q4, some of that May spill into Q1, but you know that.
That would be the end of it.
Speaker Change: Okay. That's helpful. And then really quick Jeff just to go back to your comment on there.
Speaker Change: So your expectation just for stock based comp would be an additional call it $10 million to $15 million for Q4 over the $1 30 year to date kind of guide is that the right way to think about that if the share price stays where it is.
Speaker Change: Yeah, Yeah, that's exactly right I mean with the rapid rise we've seen in the share price in the last kind of six.
Speaker Change: Six weeks or so.
Speaker Change: If it's kind of finished the year at those sort of elevated levels than we would have that sort of exposure, but you've you've characterized that correctly.
Speaker Change: Okay alright, thank you.
Speaker Change: The next question comes from Devin Dodge with BMO capital markets. Please go ahead.
Speaker Change: Yeah. Thanks, Good morning, I wanted to start with the nuclear business.
But there was a recent announcement the Atkins warehouses working with the Canadian nuclear regulator.
Speaker Change: On a proven tomorrow, just wondering if you could provide some background there and what the benefits should be for the business.
Okay.
Speaker Change: Just to say the name again, sorry, I, just didnt pick that.
Speaker Change: And it sounds like you laid out.
Speaker Change: On the on the approval of all other.
Jeff Julien: Right, Yeah sure Jeff for sure.
Speaker Change: So so look let me let me backup on the monarch.
Jeff Julien: We.
Jeff Julien: We decided.
Jeff Julien: 18 months ago through research and through client engagement that the optimum them react to size for the new Renaissance in the global market going forward would be a gigawatt react. So now we we've got a fully licensed.
Jeff Julien: E C six reacts to which is a which is a 600 megawatt reactor.
Jeff Julien: It's called a gen three closer and he's got all the latest safety features it's deployable today, but what we're working on as an upgrade to that now the interesting thing.
Jeff Julien: About the monarch is it's actually an upgrade that there are components of this.
Jeff Julien: Reactor, which are being built before and what we're doing is enhancing it to get out more power into to make it market, but we're also.
Jeff Julien: I'm, bringing in some Modularized nation.
Jeff Julien: To make it efficient and the build we're also digitizing it and obviously, putting all of the latest.
Jeff Julien: Safety controls and passive safety systems to it.
Jeff Julien: So well.
We'll go through a process right now, which we believe will take us to the end of 'twenty six to take you through the regulator to get the the design complete and get it to a to a point that is deployable.
Jeff Julien: And we're on schedule for that.
Jeff Julien: It's going well I mean, we've got a better by 250 people working on this you know we've been clear about the cost of those and and we think it's a it's it's going to be.
Jeff Julien: A very very.
Jeff Julien: Differentiated product.
Jeff Julien: The market I mean, just a reminder, the.
Specific technology uses natural uranium so that takes away many hurdles for many countries. It also produces as a byproduct.
Medical isotopes, which actually.
Jeff Julien: It's a very big differentiator because its a revenue stream beyond electrical power, which is very significant as medical isotopes, becoming demand across the world.
Jeff Julien: So it's going well.
Jeff Julien: Obviously, we've not sold any yet but were marketing hard.
Jeff Julien:
The the readiness of at around 27 is very appropriate.
Jeff Julien: Any clients or any countries that Oh utilities are looking to build this has to go through their own regulatory and permitting process for Ami side anyway. So we think we're we're highly competitive across the globe.
Speaker Change: Okay. Thanks for that Okay, and then maybe just sticking with nuclear new builds.
Speaker Change: If we look out five plus years and assume that the interest that you're currently saying for newbuild that turn into real opportunities do you see a risk the industry could be.
Speaker Change: Passenger constrained either from a supply chain labor financial support perspective, and how would you position the business ahead of that.
Speaker Change: To overcome those potential constraints.
Speaker Change: Yeah.
Speaker Change: That's top of mind question for Us I mean, we've on boarded them over.
Speaker Change: Over a 1000 people in the last year or so.
To put it into a nuclear business now.
Speaker Change: We do that in many ways, we do it through bringing in.
Speaker Change: The junior and through graduates and through working with universities and schools, we do it through retraining, our engineers that are in our engineering services business.
Speaker Change: And we do it by retraining project managers from our U S business, but we also do it by being a really good employer and taking nuclear professionals from around the globe.
And that's going well and we believe that we can build the capacity that's needed for what for example, what you see on slide 12.
Speaker Change: The supply chain.
Speaker Change: We have had this campaign that theres been running cold Canadians for can do to bring the supply chain along with our journey to make sure Theyre also equipped.
Speaker Change: Specifically in Canada for the very strong domestic market and.
Speaker Change: The.
Speaker Change: Export market from Canada to the projects that we're doing overseas and I think that program is going really well.
A lot of suppliers have come on board, we have a group now you know that we chat with me.
Speaker Change: Such that we can communicate was necessary to build capacity.
Speaker Change: Ultimately.
Speaker Change: There may be a need to develop relationships strong relationships globally, and we have times with very strong.
Speaker Change: Global companies.
Speaker Change: Companies that can that can help but but I'll focus in the short term is definitely Canada and building the Canadians trends.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks, a lot I'll turn it over.
Speaker Change: Thank you.
Speaker Change: The next question comes from Michael <unk> with TD Cowen. Please go ahead.
Speaker Change: Okay. Thank you and good morning.
Speaker Change: I'm just hoping to go back to the very strong increase in nuclear backlogs seen sequentially and year over year.
Speaker Change: I appreciate the slide that you pointed out earlier, highlighting all of the various nuclear opportunities.
And I know you did press release, the kidney Shan Award.
Speaker Change: Which I believe would have would've benefited backlog in the quarter, but if you could just maybe expand on what were some of the other drivers to the very strong growth Besides kin Shannon.
Speaker Change: Well you know I.
Speaker Change: I spoke through the slide.
Speaker Change: In a previous question and talks about can do maybe it might be helpful. If we think about the nuclear business just step back a little bit and talk about the nuclear business as a whole because.
Canada is really important in Canada is the primary driver for the backlog growth right now, but it's not the only driver I mean, we have a full service global nuclear business.
Speaker Change: We're seeing.
Speaker Change: The Super cycle.
Speaker Change: And nuclear across the globe.
Speaker Change: <unk>.
Speaker Change: Obviously, that's driven by the need to know.
Speaker Change: Not only convert the 85% of fossil fuel electrical generation that we see across the world. We're also gonna have to the grid by about three times.
Speaker Change: That target is moving I mean, if you think about it.
Speaker Change: These data centers that are necessary to support AI.
Speaker Change: That that is putting a big strain on the electrical grid I mean, these things are well over a gigawatt of new generation. So so the market strong very very strong and.
And if you think about our own business. We support <unk> you can see we support Chi it's actually was full rolls Royce we support them.
The waste remediation across the.
Speaker Change: The U S and the UK in Sellafield and the project. We've just won which is also bringing in new work.
Speaker Change: We we we also.
Speaker Change: Actually support fusion projects and the U K was for fusion projects just had a win in the U S.
Speaker Change: And these are long research projects, but they take resorts in this eight people.
Speaker Change: To add to that I mean.
Speaker Change: So all of those things together and our wholesale business not to mention with supporting other technologies such as EDF in the UK frankly.
Speaker Change: Sizable C, which are not insignificant projects for us.
Speaker Change: And we've got like <unk> still running quite high and we've got a sizable sort of ramping up.
Speaker Change: So if you add all that together.
Speaker Change: And the can do life extension work that that's fueling backlog today.
Speaker Change: Tomorrow.
Speaker Change: It's a lot more of the same certainly with with Pickering.
Speaker Change: With Wolf signed with second phases of <unk> incentive vote up on the <unk> side, and then of course.
Speaker Change: This this <unk> four which would be the first new.
Speaker Change: You can do nuclear order in 20 years and in that on the world stage of nuclear is it's really significant for Atkins realized but it is also significant Canada.
Speaker Change: That will position us globally really really well.
And we would hope to announce something imminently on that.
Speaker Change: Okay. That's helpful. Thank you.
Speaker Change: Just looking at the cash.
Speaker Change: Our cash flow performance, obviously very solid in the quarter and.
Speaker Change: Jeff I think you reiterated the expectation for over $400 million of.
Speaker Change: Cash flow from operations for the full year 2020 for I guess as we as we look to the fourth quarter typically also a very strong quarter for cash flow.
Can you just comment on any dynamics, we should be thinking about it, particularly as you near the end of the L. S. Teekay projects and then it's sort of a follow on to that.
Speaker Change: Help us think about capital allocation priorities at this point given again the stronger cash flows.
Speaker Change: The fact that leverage came down in the quarter, how have your priorities of all from a capital allocation perspective.
Speaker Change: Yeah.
Yeah, no happy to do so.
As you say, we hadn't and into the fourth quarter and in a good position.
Speaker Change: We saw the benefit of.
Speaker Change: Nuclear advance in that in that third quarter, which are which also helps.
Speaker Change: But very confident in the.
Speaker Change: In the $400 million and if I then pivot as your question does too.
Speaker Change: Capital allocation I think what you know.
Speaker Change: That shows both our current leverage and our forecast through the end of the year.
Speaker Change: Which all else being equal would continue to improve our leverage and our balance sheet. It puts us financially in a very strong position to execute on for instance, our land and expand inorganic strategy in the U S N.
Speaker Change: Identifying and ultimately transacting on bolt on acquisitions is clearly part of our strategy and I think our bank.
Speaker Change: Well setup to do list.
Speaker Change: Just just to build on that though with the we have seen you're buying back some stock with.
Speaker Change: All of these elements coming together as they are in terms of cash flow and leverage coming down.
Speaker Change: Where the buybacks fall at this point.
Speaker Change: In your in your list of priorities.
Speaker Change: Yes, I think as you.
Speaker Change: You saw we wanted to under our capital allocation framework to be.
Speaker Change: Effectively exercising all elements of it that we've been reducing debt.
Speaker Change: We have been returning some money to shareholders and we would hope to also.
Speaker Change: Execute on M&A.
Speaker Change: So I think we'll continue we'll continue to.
Speaker Change: Do that with the difference being that our intention would clearly be.
Speaker Change: Going forward to be able to ultimately announce something from an M&A perspective as well.
Speaker Change: Perfect I'll leave it there thank you.
Speaker Change: Thank you. The next the next question comes from Ben Wyatt for Yang with Detroit and capital markets. Please go ahead.
Speaker Change: Thank you very much and good morning, everyone. Congrats towards your resolved and I'll also thank you for the improved disclosure in the prepare remarks.
Speaker Change: First question when we look at the U S. At Lee a strong organic gross margins was down about 50 bps a year.
Speaker Change: Your per year due to lower income of the emergency work, but also change in business mix. So could you maybe provide greater color about the did mix and also.
Speaker Change: The contribution from emergency work in Q4 last year, just trying to gauge what we should expect from a margin standpoint, especially on the back up.
Speaker Change: Packed with Milton.
Speaker Change: Recently.
Yeah, It's Jeff why don't why don't I take that one.
Speaker Change: So you're absolutely right than what we had been seeing less and less of that emergency work through FEMA.
Speaker Change: We have done in the past.
Speaker Change: And that certainly played into part of the business mix. We had we had a couple of the projects.
Projects are finishing out it at lower margins, so that that played into it as well.
Speaker Change: But we see both of those frankly, as a sort of temporary headwinds not surprisingly with.
Speaker Change: The Hurricanes, we've seen recently.
Speaker Change: We expect the emergency work and indeed, we are winning contracts now.
Speaker Change: To provide our valuable skill set that we bring as well as others to helping those hard hit areas.
Speaker Change: We would expect to see that improving through Q4, and then into and then into next year. So I think that will be helpful from a margin.
Speaker Change: Perspective, and the underlying business itself.
Speaker Change: Absence of feed projects.
Speaker Change: Continuing to have strong margins and we would expect to.
To see that normalize over Q4 and into next year.
Speaker Change: Okay, and you're on the call Jeff you mentioned some color about the organic growth in the fourth quarters that it could be flat given the close out of a couple of major project and a harder year over year comp. So is there any risk of this project timeline dynamic bleeding into 'twenty.
Speaker Change: 25, and the impacting organic growth for the next couple of quarters or is it just more of a one quarter issue.
Speaker Change: So a couple of specifics.
Speaker Change: In Q4.
Speaker Change: A couple a couple of headwinds I mean, we had an incredible.
Speaker Change: Q4 2023.
Speaker Change: Oh, very exceptional and we have projects in Canada that we didn't win the second phase of so so some things really specific as far as going forward.
Speaker Change: The market.
Speaker Change: Confidence in our businesses from the full regions.
Speaker Change: Positioning where we were really pleased with the wins that we're getting.
Speaker Change: And the marketplace and our ability to continue to win those so we're confident in the range that we.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Year over year, 'twenty, five 'twenty six 'twenty seven.
Speaker Change: This is a it's a bit of a bit of a blip in Q4.
Speaker Change: We would anticipate so obviously.
Speaker Change: What we're trying to be prudent and building that in.
Speaker Change: Okay, and then just on the free cash flow side, you reiterate your guidance of 400 million plus in terms of cash flow from operation are you also made the great comments about the advance from nuclear project in Q3, driving up a free cash flow generation. So just wondering about the Q4.
Speaker Change: If you could provide more color about some working capital movement and given the big growth that we see for the next few years.
Are there any working capital movement that we should take into account in 2025, either in a positive way or a negative way.
Speaker Change: Yeah, Let me, let me comment on on the fourth quarter and then been wide probably leave most of my comments for 2025 around the shaping of cash flow to our Q4 results as we normally do but I think as we head into Q4, it's normally a strong quarter for us from a working from a working capital.
Speaker Change: <unk> perspective.
Speaker Change: And I think our expectation is we would continue to see that this quarter as well.
Speaker Change: And the business continues to obviously perform well also at.
Speaker Change: At the same time.
Speaker Change: <unk> successfully.
Speaker Change: Loren Starr, our next phase of our ERP implementation system.
Speaker Change: About 40 or 50% of the business here in the fourth quarter. So that always has the potential to kind of move our working capital around a little bit as well. We don't think at this point that would be material, but we're obviously working hard on that so.
Speaker Change: As a part of all of that.
Speaker Change: We remain confident in our ability to deliver that guidance of greater than $400 million, but.
Speaker Change: There's a lot of heavy lifting to be done through the quarter at this point and we'll come back and talk about 2025.
Speaker Change: In March.
Speaker Change: Okay, and maybe just a quick one last one for me your leverage obviously, a nice improvement in the quarter down to one four times. So could you maybe provide some color on the recent discussion with the credit agencies, the timeline for investment grade and whether the four seven is still required.
Speaker Change: To provide the credit protection.
Speaker Change: Yeah, I mean, we have regular conversations with the rating agencies.
Speaker Change: And ultimately their decision in terms of maintaining our changing their their rating is is for them.
Speaker Change: So I don't have any more insight into that we will see as we go you know certainly from our perspective, our Q3 results. Once again reinforces the fact that we think we're very much in investment grade.
Company and an organization, but.
Speaker Change: They need to do their work to to get to that.
Speaker Change: As well over time.
Speaker Change: <unk>.
Speaker Change: Sorry, what was the second four sorry, yes.
Speaker Change: No nothing nothing to obviously announced on the <unk> hundred seven we think fundamentally that the business risk.
As both we would look at it and we think as rating agencies would look at it the fundamental business itself with the type of leverage ratios. We've put out there is very much consistent with being investment grade.
Speaker Change: But obviously, we'll kind of work through that that work that through with the rating agencies over time.
Speaker Change: Thank you very much for the time Jeff.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: The next question comes from Maxim <unk> with National Bank Financial. Please go ahead.
Speaker Change: Hi, Jonathan.
Speaker Change: Alright. Thanks.
Most questions have been asked so I'll just stick to one if I may.
Speaker Change: When we look at M&A multiples, especially in the U S are they seem to be some some pretty heady.
Some of which will start the question right now I'm, just wondering how you're thinking about sort of the accretion of algorithm and so forth maybe Jeff maybe you can refresh us for us. Thanks, so much.
Jeff Julien: Yeah I mean.
Speaker Change: Both answer.
Speaker Change: We've got clear.
Speaker Change: Kind of metrics that we're working towards and I think the overriding thing I would say is that.
Speaker Change: We also have a pretty clear.
Speaker Change:
Speaker Change: Understanding.
Speaker Change: Of what.
Speaker Change: We want from a an alignment strategy.
Speaker Change: Perspective looks like.
Speaker Change: And what quality looks like and.
Speaker Change: Obviously, we've not announced anything but we've actually been working on this now for some time.
Speaker Change: It's it's the quality of the assets that we bring into the business that's important.
Speaker Change: And we're not in a hurry to do something which doesn't align to our strategy culture and the ability to.
Speaker Change: Enable our London expands and our margin expansion program to be delivered so so those those are kind of the macro requirements and the great thing about the U S.
Speaker Change: Is that there are.
Businesses that a state by state.
Employee owned businesses that are available so well.
Speaker Change: P is active that they're not always the first choice for these businesses to join.
Speaker Change: We think we can actually acquire what we need for all purposes that aligns to our strategy and our metrics.
We're confident we're going to be able to deliver on that so Jeff I don't know if you'd add anything on the metrics I think the only thing I'd add to that is that you know at the small the small tuck in range.
Speaker Change: We see lots of opportunity in that range and it frankly attractive multiples Max.
We can create a lot of value and obviously for larger.
Speaker Change: High quality regional type platforms, you play it you pay a higher price, but frankly in our land and expand strategy an opportunity like that we think we can drive an enormous amount of value through.
Speaker Change: With having that type of acquisition, even if you end up having to pay a pay a higher multiple so we think on both fronts, there's great opportunity over time for us.
Speaker Change: <unk> high quality businesses that will be very value accretive deals.
The other consideration here is that we.
Speaker Change: We are underweight in the U S. So we've got more wide space then.
Speaker Change: And then you might see from a from a peer set so we can we can.
Speaker Change: Build on that white space through these are the.
Speaker Change: Through M&A.
Speaker Change: Okay, that's great.
Speaker Change: Well thank you so much.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Denny Jasmine for any closing remarks.
Speaker Change: Thank you unless everyone.
Speaker Change: Joining us today, if you have any further questions. Please take yourself that when we think of them less than that but a good day.
Bye bye.
Speaker Change #100: This brings to a close today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Speaker Change #100: Yeah.
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Speaker Change #100: Hum.
Speaker Change #100: Hum.
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