Q4 2024 AtkinsRéalis Group Inc Earnings Call
Unknown Executive: Good day. Thank you for standing by. Welcome to Atkins Realis' fourth quarter 2024 results conference call.
Yeah.
Speaker Change: Good day, Thank you for standing by welcome to Atkins Chalet sport quarter 'twenty 'twenty four results conference call. At this time, all participants are in a listen only mode.
Unknown Executive: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. As a reminder, this call is being recorded.
After the Speakers' presentation.
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Denis Jasmin: I would now like to introduce your host for today's conference, Denis Jasmin, Vice President of Best Relations. Please go ahead. Thank you, Livia. Thank you. Good morning. Bonjour tout le monde. Thank you for joining us today.
Speaker Change: I would now like to introduce your host for today's call.
Speaker Change: Dennis Jasmine Vice President of Investor Relations. Please go ahead.
Speaker Change: Thank you yes.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Most of the month.
Unknown Executive: For those logging in, we invite you to view the slide presentation that we have posted in the Ambassador section of the website, which we will refer to during this call today. Today's call is also webcast.
Speaker Change: Thank you for joining us today for those of any other we invite you to go to slide presentation. That's posted on the investors section of the website.
Well, which we will refer to during this call today.
Unknown Executive: With me today... You are welcome to return to the Q&A for follow-up questions.
Speaker Change: Today's call is also webcast.
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Unknown Executive: 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. For information on these assumptions, risks, and uncertainties, please consult the company-relevant filings on CEDAW Plus. These documents are also available on our website.
Speaker Change: Questions.
Speaker Change: I would like.
Speaker Change: I would like to draw your attention to slide two comments made on today's call may contain forward looking information.
Speaker Change: Information by its nature is subject to assumptions risks and uncertainties.
Speaker Change: As such actual results may differ materially from the views expressed today.
Speaker Change: Automation all these assumptions risks and uncertainties. Please consult the company's relevant filings on SEDAR plus these documents are also available on our website.
Unknown Executive: Also, during the call, we may refer to certain non-IFRS financial measures. Reconciliation of these amounts, the corresponding IFRS financial measures, are reflected in our earnings release NMDNA, which can be found on CEDAW Plus and our website.
Speaker Change: Also during the call we may refer to certain non <unk> financial measures recalculation of these amongst the corresponding financial measures are reflected in our earnings release, and MD&A, which can be found on SEDAR plus and our <unk>.
Ian Edwards: And now, I'll pass the call over to Ian Edwards. Ian? Thank you, Denis. Good morning, everyone, and thanks for joining us today. So, before we deep dive into what was a great 2024, I want to take a moment to recap on a few announcements.
And our website.
Speaker Change: And now I'll pass the call over to <unk>. Thank.
Speaker Change: Thank you today, good morning, everyone and thanks for joining us today.
So before we deep dive into what was a great 2024, I want to take a moment to recap on a few announcements.
Ian Edwards: First, I am really pleased with the agreement signed earlier this morning for the sale of our interests in Highway 407. As outlined at our investor day, this is an important step in our strategic journey to simplify the business, create value for shareholders, and become a focused, world-class engineering services and nuclear company. Jeff will provide more details on the transaction in a few minutes.
Speaker Change: First I am really pleased with the agreement signed earlier this morning for the sale of our interest in highway 407.
Speaker Change: Outlined at our Investor Day. This is an important step in our strategic journey.
Speaker Change: Simply part of the business create value for shareholders and become a focused world class Engineering services and nuclear company.
Speaker Change: Jeff will provide more details on the transaction in a few minutes.
Ian Edwards: Second, we have announced a number of organizational To begin with, Phil Hoare is stepping down as Chief Operating Officer to join Balfa BT as their new Chief Executive Officer. He will stay on until the summer to allow for a smooth transition with his replacement. During that time, Phil will continue instituting measures across the business that will yield sustainable margin improvement. I want to thank Phil for his contributions to the organization, but also to me personally, and we wish him all the best in his new role.
Speaker Change: Second we have announced a number of organizational changes to begin with Phil Hoy stepping down as chief operating officer to join Balfour Beatty has been new Chief Executive Officer.
Speaker Change: He will stay on until the summer to allow for a smooth transition with his replacement during that time co will continue instituting measures across the business that will yield sustainable margin improvement I want to thank Phil for his contributions to the organization, but you also to me personally and we wish him all the best in his new role.
Ian Edwards: We also announced personnel changes to strengthen our engineering services business. in the UK and Ireland and the EMEA region. And in our nuclear business, we have also reinforced our operational capabilities to allow for successful delivery of our increasing backlog. These changes will ensure that we continue to deliver excellence and drive growth for years to come.
Speaker Change: We also announced personnel changes to strengthen our engineering services businesses.
Speaker Change: In the UK and Ireland in the EMEA region.
Speaker Change: And in our nuclear business, we have also reinforced our operational capabilities to allow for successful delivery of our increasing backlog and these changes will ensure that we continue to deliver excellence and drive growth for years to come.
Ian Edwards: Now let's move to slide three to discuss our successful 2024. 2024 was a year to remember as we capped off our pivoting to growth strategy. Success this past year further highlights the growing demand for our services to address the energy transition and an ageing global infrastructure. Our diversified portfolio enables consistent performance across our primary business segments and regions through the economic cycle. This year, for Atkinsrealis Services, we generated a record high revenue of $9.3 billion, representing more than a 15% organic growth and more than a 9% segment-adjusted EBIT to segment revenue ratio. We achieved a record backlog for Atkinsrealis services, which totaled more than $17 billion at the end of the year.
Speaker Change: Now, let's move to slide three to discuss our successful 2024.
Speaker Change: 2024 was a year to remember as we capped off a pivoting to growth strategy.
Speaker Change: Success. This past year further highlights the growing demand for our services to address the energy transition and an aging global infrastructure.
Speaker Change: Our diversified portfolio enables consistent performance across our primary business segments and regions through the economic cycle. This.
Speaker Change: This year for Atkins rehab services, we generated a record high revenue of $9 3 billion.
Speaker Change: Representing more kind of 15% organic growth and more than a 9% segment adjusted EBIT to segment revenue ratio.
Speaker Change: We achieved a record backlog for Atkins railroad services, which totaled more than $17 billion.
Ian Edwards: This represents growth of more than 25% versus the end of 2020. Results in 2024 reflect our purpose-built strategy of expanding into geographies and in markets with high total return. These results also reinforce our confidence in the Margin Expansion Plan we presented at our June investment meeting. In 2024, we had robust results across all metrics, meeting or exceeding our outlook targets we introduced at the beginning of the year. We generated more than $500 million in net cash from operating activities. highlighting the cash-generating nature of Atkins Realis.
Speaker Change: The end of the year.
Speaker Change: This represents growth of more than 25% versus the end of 2023.
Speaker Change: Results in 2024 reflects our purpose built strategy of expanding into geographies and end markets with high total returns. These results also reinforce our confidence in the margin expansion plan, we presented at our June Investor Day.
Speaker Change: In 2024, we had robust results across all metrics meeting or exceeding our outlook targets. We introduced at the beginning of the year we.
Speaker Change: We generated more than $500 million.
Speaker Change: Net cash from operating activities.
Speaker Change: Highlighting the cash generating nature of Atkins or Alex.
Ian Edwards: We won several major nuclear contests. significantly improved our links on joint venture operations and achieved substantial completion of our trillion line LSTK program. And lastly, we organically added 1,350 new employees to our headcount, while maintaining an industry-leading and employee engagement.
Speaker Change: We won several major nuclear contracts significantly improved on a linked some joint venture operations.
Speaker Change: And achieved substantial completion of our Trillium line Lf's Teekay project.
Speaker Change: And lastly, we organically added 1350, new employees to our headcount, while maintaining an industry, leading and employee engagement score.
Ian Edwards: As I just mentioned, we have now officially concluded our 2022 to 2024 strategy of pivoting to growth. As you can see on slide five, we met or exceeded all targets laid out during the 2021 investor Our results over the three years span highlight our leadership team's focus to deliver on our commitment. And we feel confident in our ability to deliver further revenue growth and margin expansion across our engineering services and nuclear portfolio. outlined under our new Delivering Excellence and Driving Growth strategy. We are optimising the business. Accelerating Value Creation. and exploring the untapped potential across our chosen end markets and drug markets.
Speaker Change: As I just mentioned we have now officially concluded our 2022 to 2024 strategy.
Speaker Change: <unk> to grow.
Speaker Change: As you can see on slide five we met or exceeded all targets laid out during the 2021 Investor day.
Speaker Change: Our results over the three year span highlight.
Speaker Change: Leadership team's focus to deliver on our commitments and we feel confident in our ability to deliver further revenue growth and margin expansion across our engineering services and nuclear portfolios outlined under a near <unk>.
Speaker Change: Delivery excellence and driving growth strategy.
Speaker Change: We are optimizing the business.
Speaker Change: Celebrating value creation.
Speaker Change: Exploring the untapped potential across our chosen end markets and geographies.
Ian Edwards: So now, moving to slide six and our quarterly results. Atkinsrealis services revenue organically increased 11%. with segment-adjusted EBIT increasing 21% to $243 million. Engineering Services Regions, revenue organically declined 3% to $1.7 billion, while nuclear revenue organically grew 64% to $464 million, a record links on revenue organically group 70 All of this resulted in over $300 million in operating cash flow generation this quarter. and a balance sheet with a strong leverage ratio of 1.1 at the bottom end of our target range.
Speaker Change: So now moving to slide six on our quarterly results.
Speaker Change: <unk> services revenue organically increased 11% with segment adjusted EBIT increased 21% to $243 million.
Speaker Change: Engineering services regions revenue organically declined 3% to $1 7 billion.
Speaker Change: While nuclear revenue organically grew 64% to $600 million to $464 million.
Speaker Change: Record high.
Links on revenue organically grew 70%.
Speaker Change: All of this resulted in over $300 million.
Speaker Change: And operating cash flow generation this quarter and our balance sheet with a strong leverage ratio of one <unk> at the bottom end of our target range.
Ian Edwards: On slide 7, you can see the continued progression of our backlog growth across Atkins Realis services. The 25% growth in 2024 was driven by key wins across our core engineering services, nuclear, and links on business.
Speaker Change: On slide seven you can see the continued progression of our backlog growth across Atkins related services.
Speaker Change: The 25% growth in 2024 was driven by key wins across our core engineering services nuclear and linked some businesses.
Ian Edwards: In Nuclear, we successfully secured a contract for the building of the C3 and C4 reactors at the Cernovoda nuclear generating station in Romania. We are extremely excited to support the next phase of work utilising our Can-Do expertise at Sonovoda, as these units will allow Romania to almost double the production of low-carbon, reliable and affordable electricity. In Ireland, we won key engineering and design contracts for water and rail projects, and in the U.S., we built on our already strong relationship with the Florida Department of Transport by securing a contract for a phased design build on a major interstate line.
Speaker Change: And nuclear we successfully secured a contract for the building of the C. III and see four reactors at the center of OTA nuclear generating station in Romania.
Speaker Change: We are extremely excited to support the next phase of work utilizing our calendar expertise, but some of it.
Speaker Change: But these units will allow Romania to almost double that production of low carbon reliable and affordable electricity.
In Ireland.
Speaker Change: We won key engineering and design contracts for water and rail projects and in the U S. We built on our already strong relationship with the Florida Department of transport by security contracts for a phase design build on a major interstate.
Ian Edwards: ahem Turning to slide eight, our engineering services business had robust organic top line growth in 2024, achieving an 8% increase year over year to a record high of $7 billion. Our revenue generation was driven by the continuation of our ability to secure new wins across our geographic zone. As we mentioned that our third quarter earnings goal year over year net organic revenue growth for the fourth quarter. was forecasted to be lower than prior quarter. This was due to very strong fourth quarter growth in 2023, as well as closeouts of a couple of major projects. As a result, fourth quarter revenue fell 3% on an organic basis.
Speaker Change: Yes.
Speaker Change: Turning to slide eight our engineering services business had robust organic top line growth in 2020 for achieving an 8% increase year over year to a record high of $7 billion.
Speaker Change: Our revenue generation was driven by the continuation of our ability to secure new wins across our geographic scope.
Speaker Change: As we mentioned on our third quarter earnings call year over year net organic revenue growth for the fourth quarter was forecasted to be lower than prior quarters.
Speaker Change: This was due to very strong fourth quarter growth in 2023, as well as closeout. So a couple of major projects as a result fourth quarter revenue fell 3% on an organic basis.
Ian Edwards: Segment-adjusted EBITDA over net revenue margin was nearly 16% in 2024 and 16.3% in the fourth quarter, representing an increase of 90 basis points and 20 basis points respectively versus the prior year period. We continued to increase our backlog, which now stands at approximately $12 billion, representing a 14% growth versus our backlog as of December 31, 2023.
Speaker Change: Segment adjusted EBITDA over net revenue margin was nearly 16% in 2024.
Speaker Change: 16, 3% in the fourth quarter, representing an increase of 90 basis points, and 20 basis points, respectively versus the prior year periods.
We continued to increase our backlog, which now stands at approximately $12 billion.
Speaker Change: Representing a 14% growth versus our backlog as of December 31, 2023.
Ian Edwards: Beginning on slide nine, we provide an overview of each of our four regions and their performance in the fourth quarter and full year 2024. In Canada, organic revenue growth was flat for the year, but contracted 11% for the fourth quarter, mainly due to the completion of a project earlier in 2024 that had a high percentage of flow-through . segment adjusted EBITDA was $31 million and $111 million respectively for the fourth quarter and full year. We ended 2024 with a nearly 13% growth. backlog increased 23% year over year. We continue to capture key awards in transportation, buildings and places, and power and renewables in March.
Speaker Change: Beginning on slide nine we provide an overview of each of our four regions and their performance in the fourth quarter and full year 2024.
Speaker Change: In Canada.
Speaker Change: Revenue growth was flat for the year, but contracted 11% for the fourth quarter, mainly due to the completion of a project earlier in 2020 for that at a high percentage of flow through costs segue.
Segment, adjusted EBITDA was $31 million.
Speaker Change: At $111 million, respectively for the fourth quarter and full year.
Speaker Change: We ended 2024 with a nearly 13% margin.
Speaker Change: Backlog increased 23% year over year, we continue to capture key awards in transportation buildings in places in power and renewables and markets and we're very pleased to have recently been selected for the Alto high speed rail project, which has the potential to transform.
Ian Edwards: And we're very pleased to have recently been selected for the Alto high-speed rail project, which has the potential to transform Canadian mobility between Ontario and Canada. entering the first year of our Delivering Excellence and Driving Growth strategy, we are committed to generating margin improvement, increasing our presence in Ontario and Western Canada, and enhancing our position across several high growth in margins.
Speaker Change: Canadian mobility between Ontario, and Quebec.
Speaker Change: Entering the first year of our delivering excellence and driving growth strategy, we are committed to generating market improvement, increasing our presence in Ontario, and western Canada, and enhancing our position across several high growth end markets.
Ian Edwards: In the UK and Ireland, performance this year highlights our established position in high-growth markets of water, aviation, defence and power and renewables. organic revenue growth this quarter was flat versus the fourth quarter of 2023, mainly due to temporary UK government project pipeline uncertainty, which has led to some award deferrals in transportation, education and health. The UK government announced in January its comprehensive 10-year infrastructure strategy. More details will be provided later this year, but the strategy is designed to facilitate long-term planning vital for housing, low-cost carbon energy, net-zero targets, and the enhancement of public services. They're also committed to investing in the nuclear and the defense sector.
Speaker Change: In the UK and Ireland performance. This year highlights our established position in high growth markets of water aviation defense and power and renewables.
Speaker Change: Organic revenue growth this quarter was flat versus the fourth quarter of 2023, mainly due to temporary UK government project pipeline uncertainty, which has led to some award deferrals in transportation education and health markets.
Speaker Change: The UK government announced in January its comprehensive 10 year infrastructure strategy.
Speaker Change: Details will be provided later this year.
Speaker Change: The strategy is designed to facilitate long term planning.
Speaker Change: So for housing low cost carbon energy net zero targets and the enhancement of public services.
Speaker Change: They are also committed to investing in the nuclear and defense sectors.
Ian Edwards: atkinsrealis excels in all these areas and our long-standing position in the marketplace sets us up to capture a fair share of work in this endeavor. On a four-year basis, revenue organically grew 4% to nearly $2.5 billion. Segment-adjusted EBITDA grew to $95 million in the quarter, while segment-adjusted EBITDA was $343 million for the full year. EBITDA margin was 19.6% in the past quarter, a record high, mainly supported by our ability to improve the efficiency of project delivery. Back off growth continued during the fourth quarter to approximately $1.7 billion in part due to new work orders in the water business.
Speaker Change: <unk> really excels in all these areas and our long standing position in the marketplace sets us up to capture our fair share of work in this endeavor.
Speaker Change: On a full year basis revenue organically grew 4% to nearly $2 5 billion.
Speaker Change: Segment, adjusted EBITDA grew to $95 million in the quarter, while segment adjusted EBITDA was $343 million for the full year.
Speaker Change: EBITDA margin was 19, 6% in the past quarter, a record high mainly supported by our ability to improve the efficiency of project delivery.
Speaker Change: Backlog growth continued during the fourth quarter to approximately one seven that was in part due to new work orders in the water business.
Ian Edwards: Turning to slide 11, we continue to make good progress with our U.S. land and expand strategy. Acquiring David Evans, Winning new projects with the Jersey Department of Transport, and strengthening our presence in California and the Mid-Atlantic. For the fourth quarter, revenue organically grew 4% year-over-year, and the increase in the underlying transportation engineering sector was partially offset by a decrease in our global minerals and mining sector. for the full year, Revenue Organically Grew 10%. to $1.7 billion. Segment-adjusted EBITDA was impacted by additional remediation costs to close out a couple of projects that are now complete. segment-adjusted EBITDA ended the year at $182 million, slightly below the 23%...
Speaker Change: Turning to slide 11, we continue to make good progress with our U S land and expand strategy.
Speaker Change: Acquired David Evans, winning new projects with agility department of transport and strengthening our presence in California, and the mid Atlantic.
Speaker Change: For the fourth quarter revenue organically grew 4% year over year at the increase in the underlying transportation engineering sector was partially offset by a decrease in our global minerals and mining sector for the full year revenue organically grew 10%.
Speaker Change: The $1 7 billion.
Speaker Change: Segment, adjusted EBITDA was impacted by additional remediation costs to close out a couple of projects that are now complete.
Speaker Change: Segment adjusted EBITDA ended the year at $182 million slightly below the 23 results backlog increased 2% year over year to approximately $1 6 billion.
Ian Edwards: backlog increased 2% year over year to approximately $1.6 billion. as we continue to prioritise key clients and leverage our unique capabilities. Across the US, we captured key wins in water, rail, transportation infrastructure, the markets where we have known expertise across the globe. As we look ahead, our pipeline of new work and revenue opportunities in the U.S. remains as strong as ever.
Speaker Change: As we continue to prioritize key clients and leverage our unique capabilities.
Speaker Change: Across the U S. We captured key wins and water rail transportation infrastructure, the markets, where we have known expertise across the globe.
Speaker Change: As we look ahead, our pipeline of new work and revenue opportunities in the U S remains as strong as ever.
Ian Edwards: We recently entered into a definitive agreement to acquire 70% stake in David Evans Enterprises. and Engineering and Staff Augmentation Services firm, headquartered in Portland, Oregon. David Evans is a great strategic fit for our land and expand strategy in the U.S. providing a West Coast regional platform with a high quality employee base and great potential to leverage our combined capabilities. This acquisition is a great example of delivering on the M&A criteria we presented at our 2024 investment. First, it aligns with the strategy of acquiring firms with longstanding, deep, local customer relationships in a market where we have a smaller footprint.
Speaker Change: We recently entered into a definitive agreement to acquire 70% stake in David Evans Enterprises, and engineering and staff augmentation services firm headquartered in Portland, Oregon.
Speaker Change: David Evans is a great strategic fit for our land and expand strategy in the U S, providing a west coast regional platform with a high quality employee base and great potential to leverage our combined capabilities.
Speaker Change: This acquisition is a great example of delivering on the M&A criteria, we presented at our 2020 for Investor Day.
First it aligns with the strategy of acquiring firms with long standing deep local customer relationships in a market, where we have a smaller footprint.
Ian Edwards: It enables us to bring our unique technical capabilities into more regionally focused high growth and market. such as Transportation, Water and Power and Renewables. And by leveraging our combined strengths, we have the size and scale to deliver large scale complex projects, increasing our position along the value chain and the project pipeline we can jointly deliver. Lastly, and certainly not least, David Evans has a strong reputation in the industry and its focus on people, its commitment to clients and its corporate values align completely with ours at Atkinsrealis.
It enables us to bring our unique technical capabilities into more regionally focused high growth end markets, such as transportation water and power and renewables.
Speaker Change: And by leveraging our combined strengths, we have the size and scale to deliver large scale complex projects, increasing our position along the value chain and the project pipeline, we can jointly base.
Speaker Change: Lastly, but certainly not least David evidence has a strong reputation in the industry and it's focused on people.
Speaker Change: His commitment to clients and its corporate values align completely with ours Atkins railroads.
Ian Edwards: We're really excited to welcome David Evans into the company. NMEA Revenue declined 8% on an organic basis versus the fourth quarter of 2023, while segment-adjusted EBITDA grew $34 million. representing a 17% marginal. For the full year, revenue totaled $1.3 billion, representing a 28% organic growth versus 2020. segment-adjusted EBITDA was $150 million, or an approximately 18% margin. The Middle East part of our business has grown materially over the last two years, and it is a level we are comfortable with. Therefore, we expect growth to be more moderate in future years as we continue to be selective and work with high-quality clients that are looking for a best-in-class engineering capability to help deliver projects.
We're really excited to welcome David Evans into the company.
In EMEA.
Speaker Change: Revenue declined 8% on an organic basis versus the fourth quarter of 2023, while segment adjusted EBITDA grew $34 million.
Speaker Change: Representing a 17% margin over net revenue.
Speaker Change: For the full year revenue totaled $1 3 billion.
Speaker Change: Representing a 28% organic growth versus 2023.
Speaker Change: Segment, adjusted EBITDA was $150 million.
Speaker Change: And approximately $8, 18% margin.
Speaker Change: The middle East part of our business has grown materially over the last two years and is the level we are comfortable with.
Therefore, we expect growth to be more moderate in future years, as we continue to be selective and work with high quality clients that are looking for a best in class engineering capability to help deliver projects.
Ian Edwards: In Asia, we're seeing increased investments by government related to infrastructure and transportation. And our proved ability to support defence work across the globe and our deep expertise in power is positioning us to capture potential investment by the Australian government in defence and power and renewal.
Speaker Change: In Asia, we're seeing increased investments by government related to infrastructure and transportation.
Speaker Change: In our crude.
Speaker Change: The ability to support defense work across the globe and our deep expertise in power is positioning us to capture potential investments by the Australian government and defense and power and renewables.
Ian Edwards: I'd like to now move to slide 14 and the results of our nuclear bill. We continue to demonstrate significant growth. with an organic revenue increase of 64% in the quarter compared to the fourth quarter of 2023. For the full year, revenue was approximately $1.5 billion, which represents a record high and a 41% increase organic growth versus 2020. Our nuclear backlog is $3.2 billion. more than 70% higher than our backlog as of December 31, 2023, driven primarily by life extension bookings in the CanDo fleet across Canada, Europe and Asia. Segment-adjusted EBIT grew 36% to $56 million in the fourth quarter, while full-year growth was 27%.
Speaker Change: I'd like to now move to slide 14, and the results of our nuclear business.
Speaker Change: We continue to demonstrate significant growth with an organic revenue increase.
Speaker Change: 64% in the quarter compared to the fourth quarter of 2023.
Speaker Change: For the full year revenue was approximately $1 5 billion.
Speaker Change: Which represents a record high and up.
Speaker Change: 41% increase.
Speaker Change: Growth versus 2023.
Speaker Change: Nuclear backlog is $3 2 billion.
Speaker Change: More than 70% higher than our backlog as of December 31, 2023.
Speaker Change: Driven primarily by life extension bookings and the can do fleet across Canada, Europe and Asia.
Speaker Change: Okay.
Speaker Change: Segment, adjusted EBIT grew 36% to $56 million in the fourth quarter, while full year growth was 27%.
Ian Edwards: to $184 million. As a percentage of segment revenue, four quarters segment adjusted EBIT was 12% in the quarter and 12.4% for the full year.
Speaker Change: To 194 billion.
Speaker Change: As a percentage of segment revenue fourth quarter segment, adjusted EBIT was 12% in the quarter and 12, 4% for the full year.
Ian Edwards: On slide 15, we highlight the achievements across our nuclear can-do and services portfolio. In our CanDo business, we are making excellent progress on life extension projects and new builds. And we are particularly pleased with the agreement we entered into with the Government of Canada who will be providing long-term financing of up to $304 million to continue developing the proven can-do technology, including the mind. This demonstrates a full commitment to support the indigenous CanDo technology in Canada and overseas. In Romania, as I noted earlier, our work on the Sernoborna nuclear generating station over the last several years resulted in the contract to build two new Candid Reactors.
On slide 15, we highlight the achievements across our nuclear can do and services portfolios.
And our candy business, we're making excellent progress on life extension projects and new builds.
Speaker Change: We are particularly pleased with the agreement we entered into with the government of Canada.
Speaker Change: B, providing long term financing of up to $304 million to.
To continue developing the proven can do technology, including the monarch.
Speaker Change: This demonstrates our full commitment to support the indigenous can do technology in Canada and overseas.
Speaker Change: In Romania, as I noted earlier.
Speaker Change: Work on the setup of a nuclear generating station over the last several years resulted in the contract to build two new cancer reacts as this.
Ian Edwards: This is a major milestone, and it's the first new bill can do react to contract win across the globe since 2000. Additionally, we were awarded the contract to complete the retube and the life extension of Senoboda C1. I disaward the cumulative contract value to Atkinsrealis for its work on the Sona Voda. Unit 1 stands at almost $1.9 billion.
Speaker Change: This is a major milestone as the first newbuild can do react contract wins across the globe since 2007.
Speaker Change: Additionally, we were awarded the contract to complete the reach you on the life extension of incentives the seawell.
Speaker Change: But this award the cumulative contract value to Atkins realists.
Speaker Change: Work on the <unk> unit, one stands at almost $1 9 billion.
Ian Edwards: Separately, we completed the refurbishment of the Darlington Reactor 1. This was five months. I had a check. showcasing our ability to deliver major nuclear projects on time and ahead of schedule.
Speaker Change: Okay.
Separately.
Speaker Change: We completed the refurbishment of the Darlington react to walk.
Speaker Change: This was five months.
Speaker Change: Ahead of schedule and showcasing our ability to deliver major nuclear projects on time and ahead of schedule.
Ian Edwards: And lastly, in January this year, we entered into a multi-billion dollar contract for can-do life extensions at the Pickering Nuclear Generating Station. In our services business, Atkinsrealis was selected to support new Fitel design with Rolls Royce submarines as part of their plans to double the size of their site in England. Along with this work, we're seeing additional opportunities for SMR development in the US and services in the UK. In Washington State, we're supporting a project with Energy Northwest, while in the UK we're utilizing our new build expertise at Hinkley Point C and Sideswell C, along with decommissioning services at Sullivan.
Speaker Change: And lastly.
Speaker Change: In January this year, we entered into a multi billion dollar contracts for can do life extensions at the Pickering nuclear generating station.
Speaker Change: In our services business Atkins rabbits were selected to support new fits our design with Rolls Royce submarines as part of our plan is to double the size of their sites in England.
Along with this work, we're seeing additional opportunities for <unk> development in the U S and services in the U K.
Speaker Change: In Washington State, we're supporting a project with energy northwest while in the UK, we're utilizing a newbuild expertise essentially.
Speaker Change: And size of Allstate.
Speaker Change: Along with decommissioning services at southern fields.
Ian Edwards: separately in the U.S., which secured a major award from the Department of Energy to operate and maintain the depleted uranium hexafluoride conversion facilities in Kentucky.
Separately in the U S. We secured a major award from the department of energy to operate and maintain the depleted uranium hexafluoride conversion facilities in Kentucky and Ohio.
Ian Edwards: Turning to slide 16, I want to further highlight the near-term and the long-term can-do revenue opportunities within our nuclear business. As you can see, through our continued backlog growth, contract wins over the past couple of years, our customers are continuing to recognize our nuclear expertise. This is translating into revenues that we are booking today. while also building a robust backlog of strong future revenues for Atkins Realis. The potential contracts you see on this slide represent a massive opportunity for Atkins Realis and could deliver significant growth for the foreseeable future. These represent profitable. and highlight that we have real backlog, with real teams in place, delivering work every single day on these projects.
Speaker Change: Turning to slide 16, I want to further highlight the near term and the long term can do revenue opportunities within our nuclear business.
Speaker Change: As you can see through our continued backlog growth contract wins over the past couple of years, our customers are continuing to recognize on nuclear expertise.
Speaker Change: This is translating into revenues that we are booking today.
Speaker Change: While also building a robust backlog of strong future revenues for Atkins revenues.
Speaker Change: The potential contracts you see on this slide represent a massive opportunity corrections rallies and could deliver significant growth for the foreseeable future.
Speaker Change: These represent profitable contracts and highlight that we have real backlog with real teams in place.
Speaker Change: Levering work every single day on these projects.
Ian Edwards: Now moving to slide 17 and our links on LSDK and capital. in LinkedIn segment revenue grew organically 70% quarter over quarter, 42% for the year, showing strong volume momentum through 2024. LinkedIn realized 760 basis points and 350 basis points of EBIT margin expansion in the fourth quarter and the full year respectively. as operational improvements put in place earlier this year have taken hold. backlog increase 48% to a record high of 2.1 billion dollars at the end of the year. We captured several awards across the Americas, Europe, and the Middle East, leaning to strong results versus the prior years, achieving $1.5 billion in bookings for the calendar year.
Speaker Change: Now moving to slide 17, and a linked some LST K and capital businesses.
Speaker Change: And linked some segment revenue grew organically, 70% quarter over quarter, 42% for the year showing strong volume momentum through 2024 links on realized 760 basis points and 350 basis points of EBIT margin expansion.
Speaker Change: In the fourth quarter and full year, respectively.
Speaker Change: As operational improvements put in place earlier this year have taken hold.
Speaker Change: Backlog increased 48% to a record high of $2 1 billion at the end of the year.
Speaker Change: We captured several awards across the Americas, Europe, and the middle East leading to strong results versus the prior years, achieving $1 5 billion.
Speaker Change: Bookings for the calendar year.
Ian Edwards: On the LFTK projects, we recognize negative adjustment even at this quarter due to challenges on two projects. First, we had an elevated commissioning cost associated with achieving substantial completion on the Trillium Line project, which was put into operation in January. Second, on the Eglinton project, we added provisions related to future delays in putting the project into operation. We expect our responsibilities to be largely complete by the summer on this project. On capital, we received $47 million in dividends from Highway 407 in Q4 as traffic patterns continue to improve year over year.
Speaker Change: On the left Teekay projects, we recognized negative adjustment EBIT this quarter due to challenges on two projects.
Speaker Change: We had elevated commissioning costs associated with achieving substantial completion on the trillion line project, which was put into operation in January of this year.
Speaker Change: Second on the exits from projects, we added provisions related to future delays and putting the project into operation, we expect our responsibilities to be largely complete by the summer on this project.
Speaker Change: On capital, we received $47 million.
Speaker Change: And dividends from highway 447 in Q4 as traffic patterns continued to improve year over year.
Jeffrey Bell: With all of that, I'll now turn it over to Jeff to discuss our financial results. and 2025.
Speaker Change: With all of that I'll now turn it over to Jeff to discuss our financial results.
Speaker Change: And 2025 outlook.
Jeffrey Bell: Thank you, Ian, and good morning, everyone. Turning to slide 19, total revenues for the quarter increased 14% year-over-year, totaling $2.6 billion. Revenues from our professional services and project management business increased by 14%, which included a revenue increase of 15% for our services business and a decrease of 24% in LSTK projects as we are completing the remaining project. Total segment adjusted EBIT for the quarter was $217 million and was composed of $243 million for Atkins Realis services, $58 million for capital, and negative EBIT of $84 million for LSTK projects. Corporate ST&A expenses from PSNPM totaled $49 million in the quarter.
Jeff: Thank you Ian and good morning, everyone.
Jeff: Turning to slide 19, total revenues for the quarter increased 14% year over year totaling $2 6 billion.
Jeff: Revenues from our professional services and project management business increased by 14%, which included a revenue increase of 15% for our services business and a decrease of 24% in Alice Teekay projects as we are completing the remaining projects.
Jeff: Total segment adjusted EBIT for the quarter was $217 million and was composed of $243 million for Atkins reality services $58 million for capital and negative EBIT of $84 million for LST care projects.
Jeff: Corporate SG&A expenses from <unk> totaled $49 million in the quarter.
Jeffrey Bell: As expected, higher than last year, mainly due to the strong appreciation of our share price in 2024 and its impact on our long-term employee incentives. We anticipate that the corporate SG&A from PS&PM should be between $120 and $130 million for full year 2020. The IFRS net income this quarter was $52 million, compared to $90 million in Q4 2023. And adjusted EPS from PS and PM for the quarter was $0.26 per diluted share, compared to $0.45 in the fourth quarter line. On slide 20, you can see the selected financial metrics for the full year. Total revenues for the year increased by 12% to $9.7 billion compared to 2023.
Jeff: As expected higher than last year, mainly due to the strong appreciation of our share price in 2024 and its impact on our long term employee incentives expense.
Jeff: We anticipate the corporate SG&A from <unk> should be between $120 million to $130 million for full year 2025.
Jeff: Yes.
Net income this quarter was $52 million compared.
Jeff: Compared to $90 million in Q4 2023.
Jeff: And adjusted EPS from <unk> for the quarter was 26 cents per diluted share compared to <unk> 45 in the fourth quarter last year.
Jeff: On Slide 20, you can see the selected financial metrics for the full year.
Jeff: Total revenues for the year increased by 12% to $9 7 billion compared to 2023.
Jeffrey Bell: Revenues from PS and PM increased by 12%, which included a revenue increase of 16% for our services business and a decrease of 51%. in the LSTK program. Total segment-adjusted EBIT for the year increased by 10% to $845 million, which was comprised of $872 million for Atkinsrealis services, $107 million for capital, and negative $134 million for LSDK projects. We would expect the LSTK Project's quarterly EBIT loss for 2025 to be in the range of $10 to $20 million. representing overhead costs, cost to pursue claims outstanding, and reflecting our experience of higher commissioning costs in 2024. Net financial expenses for the year were $163 million compared to $186 million in 2023, mainly due to a lower level of recourse debt and lower interest rates.
Jeff: Revenues from <unk> increased by 12%, which included a revenue increase of 16% for our services business and a decrease of 51% in LLS Teekay projects.
Jeff: Total segment adjusted EBIT for the year increased by 10% to $845 million, which was comprised of $872 million for Atkins rail services $107 million for capital and negative $134 million for ALS Teekay projects.
Jeff: We would expect the Ellis Teekay projects quarterly EBIT loss for 2025 to be in the range of $10 million to $20 million representing.
Jeff: Representing overhead costs.
Jeff: Cost to pursue claims outstanding and reflecting our experience of higher commissioning costs in 2024.
Jeff: Net financial expenses for the year were $163 million.
Jeff: Compared to $186 million in 2023, mainly due to a lower level of recourse debt and lower interest rates.
Jeffrey Bell: IFRS net income from continuing operations totaled $284 million in line with 2023, which included a $46 million net gain on the disposal of our Scandinavian engineering services. adjusted net income from PSMPM increase by 15% to $315 million or $1.79 per diluted share. We expect for 2025, a tax rate on our adjusted PS and PM net income to be in the high 20%. Our backlog ended the year at a record high of $17.5 billion, 24% higher than at the end of 2023, with strong book-to-bill ratios at the engineering services, nuclear, and links on-site.
Jeff: <unk> net income from continuing operations totaled $284 million in.
Jeff: In line with 2023, which included a $46 million net gain on the disposal of our Scandinavian engineering services business <unk>.
Jeff: Adjusted net income from <unk> increased by 15% to $315 million or $1 79 per diluted share.
Jeff: We expect for 2025, a tax rate on our adjusted PSM PM net income to be in the high 20%.
Jeff: Our backlog ended the year at a record high of $17 5 billion.
Jeff: 24% higher than at the end of 2023 with strong book to Bill ratios in the engineering services nuclear Enlink segments.
Jeffrey Bell: If we now move on to slide 21 and free cash flow. Net cash generated from operating activities in 2024 was $526 million, compared to $66 million in 2023, as cash generation improved in Atkins Realis services and cash outflows in LSTK projects significantly decreased. The improvement in Atkins Realis services compared to the prior year was driven by higher EBITDA and improved working capital positions. which included sizable advances on nuclear refurbishment contracts of around $100 million. As these advances are expected to be mainly consumed in 2025, we anticipate that the net cash generated from operating activities for the company will be lower in 2025 than in 2024, as forecast cash flow growth from increased EBITDA won't offset this working capital impact.
Jeff: If we now move on to slide 21, and free cash flow.
Jeff: Net cash generated from operating activities in 2024 was $526 million compared.
Compared to $66 million from 2023 as cash generation improved in Atkins rehab services and cash outflows and Alice Teekay projects significantly decreased.
Jeff: The improvement in Atkins rehab services compared to the prior year was driven by higher EBITDA and improved working capital positions, which included sizable advances on nuclear refurbishment contracts of around $100 million.
As these advances are expected to be mainly consumed in 2025, we anticipate that the net cash generated from operating activities for the company will be lower in 2025 and in 2024.
Jeff: As forecast cash flow growth from increased EBITDA will offset this working capital impact.
Jeffrey Bell: We expect operating cash flow to be in excess of $300 million for the full year of 2025. Note that we expect the cash generation to be more weighted towards the second half of the year, with a similar profile to 2024. After CapEx of $160 million, which included $48 million for the development of Monarch in 2024, and the payment of lease liabilities of $81 million, our free cash flow stood at $327 million for the year. I would note that the $43 million of provincial and federal charges represent the final payments under these arrangements. We expect a higher level of CapEx for 2025 in the range of $150 to $200 million as we continue to invest in the CanDo Monarch nuclear reactor development.
Jeff: We expect operating cash flow to be in excess of $300 million for the full year of 2025.
Jeff: Note that we expect the cash generation to be more weighted towards the second half of the year with a similar profile to 2024.
Jeff: After capex of $160 million.
Jeff: Which included $48 million for the development of monarch in 2024, and the payment of lease liabilities of $81 million or free cash flow stood at $327 million for the year.
Jeff: I would note that the $43 million of provincial and federal charges represent the final payments under these arrangements.
Jeff: We expect a higher level of Capex for 2025, and the range of $150 million to $200 million as.
Jeff: As we continue to invest in the can do monarch nuclear reactor development.
Jeffrey Bell: We believe this investment will lay the foundation for future nuclear revenue growth, as the demand for low-carbon, reliable power generation remains a priority around the world. Our leverage ratio continued to improve in Q4, and at the end of the year, the net recourse and non-recourse debt to adjusted EBITDA was 1.1 at the lower end of our 1 to 2 times target. If you move to slide 22...
We believe this investment will lay the foundation for future nuclear revenue growth as the demand for low carbon reliable power generation remains a priority around the world.
Jeff: Our leverage ratio continued to improve in Q4 and at the end of the year, the net recourse and nonrecourse debt to adjusted EBITDA was $1 one at the lower end of our one to two times target range.
Jeff: If you move to slide 2022 slide 22.
Jeffrey Bell: As you have seen, we have entered into three agreements to sell our entire 6.76% interest in our Highway 407 investment. We will be selling just over 5% to Ferrovial, with 3.3% sold under a share purchase agreement payable at closing, and the remaining 1.76% under a put and call option agreement exercisable during the 18 months post-closing. We will also sell 1.7% to CPP Investments under a share purchase agreement for which we would expect a payment shortly after the closing of the sales of Ferrovial. Both the put-and-call option with Ferrovial and the share purchase agreement with CPP Investments are subject to an adjustment based on an agreed formula, taking into account when they are exercised or paid.
Jeff: As you have seen we have entered into three agreements to sell our entire 676% interest in our highway 407 investment.
Jeff: We will be selling just over 5% of <unk> with three 3% sold under a share purchase agreement payable at closing.
Jeff: And the remaining $1, 76% under a put and call option agreement exercisable during the 18 months post closing.
We will also sell one 7% to CPP investments under share purchase agreement for which we would expect the payment shortly after the closing of the sale to Ferrovial.
Jeff: Both the put and call option with Ferrovial and the share purchase agreement with CPP investments are subject to an adjustment based on an agreed formula taking into account when they are exercised or exercised or paid.
Jeffrey Bell: The total price is approximately $2.8 billion. We will use part of the proceeds to repay the related limited recourse debt of $400 million. We also expect to pay a mid-to-high single-digit percentage cash tax on the net gain from the transaction through the use of available non-capital losses. The net proceeds will then be deployed in line with the company's capital allocation priorities outlined at our 2024 Investor Day. and based on what management and the board of directors believe would be in the best interest of the company and most accretive to shareholder value over time. This would include paying down indebtedness, potentially funding additional growth through small and midsize acquisitions, and returning capital to shareholders with share buybacks, our preferred method to do so.
Jeff: The total price is approximately $2 8 billion.
Jeff: We will use part of the proceeds to repay the related limited recourse debt of $400 million.
Jeff: We also expect to pay a mid to high single digit percentage cash tax on the net gain from the transaction through the use of available non capital losses.
Jeff: The net proceeds will then be deployed in line with the company's capital allocation priorities outlined at our 2020 for Investor Day.
Jeff: And based on what management and the board of Directors believe would be in the best interest of the company and most accretive to shareholder value over time.
Jeff: This would include paying down indebtedness potentially funding additional growth through small and mid size acquisitions, and returning capital to shareholders with share buybacks, our preferred method to do so.
Jeffrey Bell: We expect the transaction to close during the second quarter of 2025.
Jeff: We expect the transaction to close during the second quarter of 2025.
Jeffrey Bell: Finally, on slide 23, I'd like to turn to the outlook, for which I will summarize. Given our high-level backlog and strong pipeline of opportunities, we are expecting an organic revenue growth rate, compared to 2024, between 7% and 9% for the engineering services region. with an anticipated segment-adjusted EBITDA to net revenue margin of between $16,000 and $17,000. Note that we expect the organic growth to be more weighted to the second half of 2025 as the drivers of the lower growth in Q4 extend into the first part of 2025 before rolling off. As for the nuclear segment, we expect revenues for the full year 2025 to continue to grow and be between $1.6 and $1.7 billion, with an adjusted EBIT to gross revenue margin in the range of $12 to $14 billion.
Jeff: Yes.
Jeff: Finally on slide 23, I'd like to turn to the outlook.
Jeff: For which I will summarize.
Jeff: Given our high level backlog and strong pipeline of opportunities, we are expecting an organic revenue growth rate compared to 2024 between seven and 9% for the engineering services regions with an anticipated segment adjusted EBITDA to net revenue margin of between 16 and 17%.
Jeff: Note that we expect the organic growth to be more weighted to the second half of 2025.
The drivers of the lower growth in Q4 extending into the first part of 2025 before rolling off.
As for the nuclear segment, we expect revenues for the full year 2025 to continue to grow and be between one six and $1 7 billion.
Jeff: With an adjusted EBIT or gross revenue margin in the range of 12% to 14%.
Ian Edwards: With that, I'll now hand the presentation back to Ian. Yeah, thanks, Jeff.
With that I'll now hand, the presentation back to Ian.
Ian Edwards: 2024 was an exceptional year. And I appreciate the work of our more than 38,000 employees, whose dedication and hard work led to record performance for our engineering services and nuclear sector. As we close the chapter on our pivoting to growth strategy, I'm proud of what we've accomplished over the past three years. Clearly, our strategic, geographic and market positioning is having a positive impact on our competition. Our revenues are growing, our backlog is building, our margins are improving, and we're generating positive operating cash flow. We have proven that we can deliver on our goals and our commitment.
Ian: Yes, Thanks, Jeff.
Ian: 2024 was an exceptional year.
Speaker Change: And I appreciate the work of our more than 38000 employees.
Speaker Change: Dedication and hard work led to record performance for our engineering services and nuclear segments.
Speaker Change: As we close the chapter on a pivoting to growth strategy I'm proud of what we've accomplished over the past three years.
Clearly, our strategic geographic and market positioning is having a positive impact on our company. Our revenues are growing our backlog is building our margins are improving and we're generating positive operating cash flows we.
Speaker Change: We have proven that we can deliver on our goals and our commitments as.
Ian Edwards: As we begin our Delivering Excellence and Driving Growth Strategy. It will be apparent over the next few years our ability to perform more effectively and deliver bottom line improvement. This strategy is built on optimising the business to drive profitable growth, accelerating our footprint in growing end markets and regions and exploring untapped opportunities across the organisation. We are helping public and private entities achieve their net-zero goals and address the energy trilemma, providing low-carbon, affordable and secure energy solutions. Our historical execution track record makes us a partner of choice in these endeavors and we're proud to play a role in providing a better future for our planet.
Speaker Change: As we begin our delivering excellence and driving growth strategy.
Speaker Change: It will be apparent over the next few years, our ability to perform more effectively and deliver bottom line improvement.
This strategy is built on optimizing the business to drive profitable growth accelerating our footprint and growing end markets and regions and exploring untapped opportunities across the organization.
Speaker Change: We are helping public and private entities achieved a net zero goals and address the energy trilemma, providing low carbon affordable secure energy solutions.
Speaker Change: Historical execution track record makes us a partner of choice in these endeavors.
Speaker Change: To play a role in providing a better future for our planet and its people.
Ian Edwards: We're excited by the opportunities in front of us that we will capture in 2025 and beyond.
Speaker Change: We're excited by the opportunities in front of us and we will capture that we will capture in 'twenty five and beyond.
Unknown Executive: So with that, let's open it up for questions. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1 1 again. Please stand by while we compile the questionnaire.
Speaker Change: So with that let's open it up for questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question simply press Star one again, please standby, while we compile the Q&A roster.
Sabahat Khan: And our first question coming from the line-up. Sabahat Khan with RBC Capital Markets. See you in a moment.
Speaker Change: And our first question coming from the line of.
Speaker Change: So how would that pan with RBC capital markets. Your line is now open.
Ian Edwards: Bye. Great. Thanks and good morning. I guess just on the transaction this morning on the 407, just in terms of the use of proceeds, you indicated share buyback and looks like you announced an NCIB. Is there going to be any potential for maybe outside kind of share buybacks or is this just the buybacks will be dependent on kind of the share price and your view of that? And the second part of that is just given your M&A activity, could there be a potential to accelerate that given the balance sheet capacity or do you just expect to sort of continue on that with just a bit more cleaner balance?
Speaker Change: Okay, great. Thanks, and good morning, I guess just on the transaction. This morning on the 407.
Speaker Change: Just in terms of the use of proceeds you indicate a share buyback and it looks like you announced and in CIB is there going to be any potential for maybe outside kind of share buybacks or is this just the buybacks will be dependent on kind of the share price and your view of that and the second part of part of that is just giving you our M&A activity.
Speaker Change: Could there be a potential to accelerate that given the balance sheet capacity or do you just expect to sort of continue on that will just get more clear our balance sheet.
Ian Edwards: Yeah, thanks for the question. Look, clearly we're really pleased. to have got into this agreement to sell a 407. I mean, we did communicate it at the investor day. It's directly on strategy to pursue the value creation of the company under an engineering services and nuclear business. You will remember that we articulated a really clear capital allocation plan in reducing debt in small to medium-sized M&A and in returns to shareholders. And I'll let Jeff come back on the returns to shareholders in a moment. But I do want to say one thing here and be clear about it.
Speaker Change: Yes. Thanks, Thanks for the question.
Speaker Change: Look clearly we're really pleased.
Speaker Change: <unk>.
Speaker Change: Got into this agreement to sell a $4 seven we did communicated at the Investor day.
Speaker Change: Directly on strategy to pursue the value creation of the company under an engineering services and nuclear business.
Speaker Change: You will remember that we articulated a really clear.
Speaker Change: Our capital allocation plan.
Speaker Change: In reducing debt in.
Speaker Change: Small to medium sized M&A and then.
Speaker Change: Returns to shareholders and I'll, let Jeff come back on the return to shareholders.
Speaker Change: But I do want to say one thing here.
Ian Edwards: We've our first acquisition and we're proud of that. But we have a methodical plan and we need to stick with the plan that we have for M&A, which is basically filling geographical white space and filling capability white space in small to medium-sized acquisitions. And until we have being through that methodical process and develop. The capabilities and the confidence that we can integrate successfully and that we can fill those white spaces successfully, that's where we're going to stay. And that's the M&A program that we're going to stay with.
Speaker Change: And be clear about it we've done our first acquisition and we're proud of that but we have a methodical plan.
Speaker Change: We need to stick with the plan that we have for M&A, which is basically.
Speaker Change: Filling geographical white space, and filling capability white space and small to medium sized acquisitions and until we have.
Speaker Change: Been through that methodical process and developed.
Speaker Change: The capabilities and the confidence that we can integrate successfully and that we can fill those wide spaces successfully.
Speaker Change: Where we're going to stack and Thats. The M&A program, we're going to stay with.
Jeffrey Bell: As for the returns to shareholders, Jeff, I don't know if you want to kind of come in on that point about the potential share buyback. Yeah. So, Sabah, you would have seen the NCIB, as you say, that we filed this morning at a higher level than we did last year, you know, which is very much recognizing that as part of that balanced capital allocation framework that Ian was talking about, and that I mentioned in my script that, you know, we would expect some of over time to be to be deployed, you know, through a through a share buyback, you know, we'll continually, you know, keep that balance, you know, under review with the board, looking at what creates the most value.
Speaker Change: As for the <unk>.
Speaker Change: Returns to shareholders, Jeff I don't know if you want to kind of comment on that point about the.
Speaker Change: The potential share buybacks, yes, so add savi you would've seen the.
Speaker Change: And CIB as you say that we filed this morning, it at a higher level than we did.
Speaker Change: Last year, which is very much recognized.
Speaker Change: As part of that balanced capital allocation framework that Ian was talking about.
Speaker Change: And that I mentioned in my script that we would expect.
Speaker Change: Overtime to be to be deployed through through a share buyback.
Speaker Change: We will continually keep that balance under review.
Speaker Change: With the board looking at what creates the most value.
Jeffrey Bell: And, you know, evolve that as we go.
Speaker Change: And evolve that as we go.
Ian Edwards: Great. And then just maybe one on the engineering side, I guess, under your guidance for 7 to 9% organic growth here in 2025. You provided a little bit of color on that, but maybe you can just dig a little bit into maybe the larger contributors there, particularly maybe just dig into your outlook for your US business, just given some of the headlines that we're seeing out there. Thank Yeah, I mean, we We obviously were pleased with the growth of 8.4% across the engineering services business in 2024. Little bit of drop off towards the end of the year, which is probably going to drag into Q1 this year.
Speaker Change: Okay, Great and then just maybe one on the engineering side I guess I know your guidance for 7% to 9% organic growth here in 2025.
Speaker Change: Can you provide a little bit of color on that but maybe if you could just dig a little bit into maybe the larger contributors there, particularly maybe just dig into your outlook for your U S business just given some of the headlines that we're seeing out there. Thank you.
Speaker Change: Yes.
Speaker Change: Hey.
Speaker Change: We obviously were pleased.
Speaker Change: With the growth of eight 4%.
Speaker Change: Across the engineering services business in 2024 little bit of drop off towards the end of the year, which is probably going to drag into Q1 this year, but as we work through the year.
Ian Edwards: But as we work through the year, all our metrics are telling us the markets are strong. If you look at our backlog, which is a real forward-looking metric, clearly that's up 25%. Well, we're pretty confident and 40% in engineering services. So we're pretty confident in the markets. I mean, the markets are still, you know, regardless of kind of geopolitical kind of turmoil, the markets are still underpinned by this need to replace aging infrastructure. and increase the electrical generation and energy transmission across the engineering transformation. So, those things are kind of possible for us to implement in our partner countries, the US, Canada and the UK.
Speaker Change: All our metrics are telling us the market is strong if you look at our.
Speaker Change: Backlog, which is a real forward looking.
Metrics clearly that so.
Speaker Change: 25% so.
We're pretty confident.
Speaker Change: <unk> percent and engineering services.
Speaker Change: So we're pretty confident the markets I mean, the market is still regardless of kind of.
Speaker Change: Geopolitical kind of turmoil the market is still underpinned by this needs to replace aging infrastructure.
Speaker Change: <unk> increased the electrical generation and energy transmission.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Ian Edwards: So, we're, you know, we're obviously comfortable with that range we've put out. Our long range is above 8%, we're comfortable with that still.
Speaker Change: U S, Canada and the U K.
So we're.
Speaker Change: Obviously comfortable with that range, we've put out a long range is above 8%, we're comfortable with that so.
Ian Edwards: And, you know, if there's questions on specifics around the regions, happy to kind of answer those. Thanks very much.
Speaker Change: If there's questions on specifics around the region.
Speaker Change: And so those.
Unknown Executive: I'll pass the line. Thank you.
Speaker Change: Thanks, very much I'll pass along.
Yuri Lynk: And our next question, coming from the line of Yuri Lynk with Canaccord, your line is now open. Good morning, guys. Morning. Just on the margin outlook specifically for Canada and the U.S., good growth in 2024. been especially in the US, but you know, margins down in both regions. So I'm just wondering if we should expect those to do Canada in the US to do most of the heavy lifting on the margin front in getting to your margin improvement target for 2020. Yeah, so good question. So As you know, we have a clear plan for margin growth and the plan needs to reach and will reach the long-range outlook of the 2 to 300 basis points improvement to the 17 and 18% EBITDA to net revenue that we articulated for 2027.
Speaker Change: Thank you.
Speaker Change: And our next question coming from the line of Yuri Lynk with Canaccord. Your line is now open.
Speaker Change: Good morning, guys good morning.
Speaker Change: Got it.
Speaker Change: Yes.
Just on the.
Speaker Change: The margin outlook, specifically for Canada, and the U S. I mean <unk>.
Speaker Change: Good growth in 2024.
Speaker Change: Especially in the U S, but margins down in both regions. So I'm just wondering if we should expect those to do.
Speaker Change: Canada and the U S to do most of the heavy lifting on the margin front and getting to your margin improvement target for 2025.
Speaker Change: Yes, so good question.
Speaker Change: So.
Speaker Change: As you know we have.
Speaker Change: Clear plan for margin.
Speaker Change: Growth in the plan.
Speaker Change: Who needs to reach and will reach the long range outlook of the three 2% to 300 basis points improvement to the 17 and 18% EBITDA to net revenue that we articulated for 2027.
Ian Edwards: So 25 was the first year of this program, and we've improved 90 basis points in the year. So I think that's a positive, that the program is working and we're kind of on track. We've put out a range of 16 to 70. in 2025, which we are confident that we will achieve. But I did say it's not going to be a straight line across all the regions. I mean, we've gone into regional reporting so you can see, you know, the regions that are performing well and the regions that need further improvement, to be transparent about that.
Speaker Change: So 25 years, the first year of this program.
We've improved 90 basis points in the year, So I think thats a positive.
Speaker Change: Program, it's working.
We're kind of on track.
Speaker Change: We've put out a range <unk>.
To 17.
Speaker Change: In 2025, which we are confident we will achieve but I did say it is not going to be a straight line across all the regions. I mean, we've gone into regional recorded so you can see.
Speaker Change: The regions.
Speaker Change: Performing well in the regions that need further improvement to be transparent about that and they are all at different stages, frankly, I mean, our most mature business as the U K, it's our highest margin business.
Ian Edwards: And they're all at different stages, frankly. I mean, our most mature business is the UK. It's our highest margin business. And, you would expect that. We have been very deliberate in the Middle East in having high quality work, and we're going to stay with that. And that's why it's a high margin business. Canada's on an improvement trend and it came from a low base and it's continuing to improve and we'll see further improvement in 2025. And the US, you know, is our kind of growth area. So it's a land and expand and we're balancing margin expansion against growth there.
Speaker Change: You would expect that we have been very deliberate in the middle East and have been high quality work and we're going to stay with that and that's why it's a high margin business.
Canada on an improvement trend and it came from a low base and it's continuing to improve and we will see further improvement in 2025 in the U S.
Speaker Change: As a kind of growth area. So it is a land and expand and we're balancing margin expansion against growth.
Jeffrey Bell: But all in all, pleased with progress so far. There are very specific kind of initiatives across the whole business to get us there. But we are confident in getting to that 16, 17. I think the other thing I'd add to that Ian is, and you're asking particularly about, you know, for instance, the US, as Ian mentioned earlier, you know, we did have a couple of projects with additional remediation costs in 2024 that we wouldn't expect to repeat in 2025. And therefore, that will also underpin that improvement, you know, year over year that we would expect to see going into 2025 in the US.
Speaker Change: But all in all pleased with progress so far.
Speaker Change: There are very specific kind of.
<unk> service across the whole business to get us there.
Speaker Change: But we are confident in getting to that 16, 17, and 25 I think the other thing I'd add to that Ian is and Youre asking particularly both for instance, the U S.
Speaker Change: Ian mentioned earlier, we did have a couple of projects with additional remediation costs in 2024 that we wouldn't expect to repeat in 2025, and therefore that will also.
Speaker Change: Underpinning that improvement year over year that we would expect to see going into 2025 in the U S. For instance.
Speaker Change: Okay.
Ian Edwards: Last question, just on a clarification on Monarch. On slide 16, where you're covering off the new build opportunities in Canada, the slide shows Monarch and then Slash and CanDo. Is that implying that the existing CANDU technology could be chosen? For a new build in Canada. I'm just I'm just trying to interpret what you're no, no, absolutely. Yes. I mean, you know, it's the existing technology, which is been deployed in Seneboda on three and four. So that new build there is the existing EC6, we call it. And obviously that 600 megawatt reactor is... upgraded to be the latest gen.
Speaker Change: Last question just on <unk>.
Speaker Change: Clarification on on <unk>.
Speaker Change: <unk> arc on on Slide 16, where you.
Youre covering off the newbuild opportunities in Canada.
Speaker Change: Slide shows monarch, and then slash and can do.
Speaker Change: Is that implying that existing the existing kandi technology could be chosen for a newbuild in Canada I'm just I'm just trying to in terms of what Youre no no no.
Speaker Change: Yes.
Speaker Change: It's the existing technology, which is <unk>.
Speaker Change: Being deployed.
Speaker Change: Incentive OTA on three and four so that Newbuild there is the existing <unk> six we call it.
Speaker Change: And obviously that that.
Speaker Change: 600 megawatt reactor is.
Speaker Change: Graded to be.
Speaker Change: The latest gen.
Ian Edwards: from a safety, from a regulatory perspective. And it's still very relevant as a today current reaction. are customers that we are dealing with and we're in competition. So there's no guarantee. The customers that we are targeting in Canada really want this monarch gigawatt scale reaction. So that's why we really went into the development. And we believe it's the optimum size reactor for cost and efficiency. for Lowest Cost of Electricity. And that that's why we're developing it for the for the global market and the domestic market. But it but it could well be that some provinces choose the existing technology.
Speaker Change: From a safety from a regulatory perspective, and it is still very relevant.
Speaker Change: As a today current.
Speaker Change: Reactor.
Speaker Change: Our customers.
Speaker Change: But we are dealing with and we're in competition. So there is no guarantee the customers that we are targeting in Canada.
Speaker Change: Really want this monarch gigawatt.
Speaker Change: Scale reactor.
Speaker Change: So that's why we really went into the development and we believe it's the optimum size reactor for cost and efficiency.
Speaker Change: The lowest cost of electricity and Thats why we are developing it for the global market in the domestic market, but it could well be that.
Speaker Change: Some provinces choose the existing technology I mean, all of these things are a work in progress.
Ian Edwards: I mean, all of these things are a work in progress. You know, we're pretty excited with two customers in Ontario, and we're pretty excited about a customer in Alberta. But obviously, you know, no confirmed orders to announce today, but, you know, the future is looking pretty good. And even international interest in Europe and Asia as well, Asia Pacific, so it could be either. So that's a fair question. And does the Monarch take enriched uranium or it can take natural uranium as well? No, all the traits of the Monarch are the same as the existing CAN-DO technology.
Speaker Change: We're pretty excited with two customers in Ontario, and we're pretty excited about a customer in Alberta, but obviously no confirmed orders to announce today.
Speaker Change: But.
Speaker Change: The future is looking pretty good and even international interest in Europe.
Speaker Change: Asia as well as specific.
So it could be so that's a fair question, Okay and does the monarch take enriched uranium or it can take natural uranium as well I know my last question now all the trades at the Monaco the same as the.
Speaker Change: Existing can do technology.
Ian Edwards: And there are three really clear advantages of the CAN-DO technology over any other technology that's available on the planet. One, it's natural uranium, and natural uranium is in abundance. Enriched uranium is in really short supply right now because 47% of it comes out of Russia. Second is the medical isotope. The by-products of a can-do reactor can produce medical isotopes, and that's unique also. And the third, and what's becoming really important, is that all the components of a can-do reactor can be made in Canada. It's one of the few kind of technologies that doesn't need to go overseas for huge forged metal kind of components.
Speaker Change: And there are three really clear advantages.
Speaker Change: Can do technology over any of the technology that's available on the planet.
Speaker Change: One it's natural uranium and natural ramp is in abundance.
Speaker Change: Enriched uranium.
Speaker Change: In really short supply right now because 47% of it comes out of Russia.
Speaker Change: Second is the medical isotope.
Speaker Change: Byproducts of a can do react to can produce medical isotopes and thats unique.
Speaker Change: Also in the third and what is becoming really important is the.
Speaker Change: All of the components of a can do react to it can be made in Canada.
Speaker Change: It's one of the few kind of technologies that doesn't need to go overseas for huge forged metal kind of components.
Unknown Executive: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Chris Murray: And our next question coming from the line of Chris Murray with ATB Capital Markets. Your line is now open. Yeah, thanks, guys. Good morning. You know, maybe turning to the nuclear business and just sort of thinking about how to frame 2025 in context of the broader three-year plan. You know, 2024 was a pretty exceptional year with growth. But it feels like, you know, we're going to maybe, I don't know, not necessarily slow materially, but just maybe stabilize a bit as we go into 2025. Can you talk a little bit about how we should be thinking about what you're going to be working on through 2025?
Speaker Change: And our next question coming from the line of Chris.
Chris Murray with Keybanc capital markets. Your line is now open.
Speaker Change: Yeah. Thanks, guys good morning.
Speaker Change: Maybe turning to the nuclear business and just sort of thinking about how to frame 2025 and context of the broader three year plan 2024 was a pretty exceptional.
Speaker Change: <unk>.
Speaker Change: But it feels like we're going to have maybe I don't know not necessarily slow materially, but just maybe stabilize a bit as we go into 'twenty. Five can you talk a little bit about how we should be thinking about.
Speaker Change: What youre going to be working on through 2025.
Ian Edwards: And I know that at one point, you know, we talked about margins kind of moving to the lower end of the range last year. How do we think about the margin progression through this year, based on where the revenue stacks are? Yeah, yeah, good questions. And obviously... We put a range out for the revenues this year 1.6 to 1.7. So you can see from that the sort of almost exponential growth that we've experienced in 2024 doesn't carry through to 2025. But what I think is important is that there's a significant increase in backlog. So the revenues that we're going to see, 2025, 2026, 2027, are almost in the backlog, because these projects They're released in phases, as you can see on the slide 16.
Speaker Change: And I know that at one point.
Speaker Change: We talked about margins kind of move into the lower end of the range last year, how do we think about the margin progression through this year.
Speaker Change: Based on the published Extranet.
Speaker Change: Yes, yes, good questions and obviously.
Speaker Change: We put a range out for the revenues this year $1 61, seven so you can see from that.
Speaker Change: Almost exponential growth that we experience.
Speaker Change: In 2024 doesn't carry through to 'twenty five.
Speaker Change: But what one of the thing is important is that.
Speaker Change: A significant increase in backlog so the revenues that we're going to see <unk>.
Speaker Change: $35 26 27.
Speaker Change: We're almost in the backlog because these projects.
Speaker Change: Theyre released in phases as you can see on the slide 16.
Ian Edwards: And not all of those phases are in the backlog. And these projects have a ramp up. So, you know, even the life extension projects will start with engineering, and then it'll get into physical work and the revenues build through that. So, it's almost like what you see on the page there, in terms of getting to the 27, 1.82 billion dollars, you know, we're like, almost there, you know, we're very, very confident of doing that. Now, what is the potential for revenues and projects and backlog on top of that? And that's what we try to articulate on this slide as well.
Speaker Change: Not all of those phases or in the backlog yet.
Speaker Change: These projects have a ramp up so if you even the life extension projects, we'll start with engineering and then it will get into a physical work and the revenues build through that so it's almost like what you see on the page.
Speaker Change: In terms of getting to the 27 182 billion.
Speaker Change: We're like almost that we're very very confident of doing that now what is the potential for revenues and then projects in backlog on top of that and Thats. What we tried to articulate on this slide as well.
Ian Edwards: It's obviously a long process for customers to make a commitment to what will be tens of billions of dollars of nuclear commitment. Now, the government appears to be making that commitment, particularly in some of the provinces in Canada and some of the countries around the world. We are working very hard to market the can-do and to sell the Monarch and the existing reactor and to compete on the world stage with what's only really four of the players, the French, the Koreans, the American technology and ours. So if we do see orders coming through, which I believe would probably not be this year for new nuclear, maybe next year, those revenues will enable us to continue well beyond 27 with secure revenues and secure orders and business.
It's obviously a.
Speaker Change: Long process for customers to make the commitment to what will be tens of billions of dollars of nuclear commitment now the governments appear to be making that commitment, particularly.
Speaker Change: Some of the provinces in Canada, and some of the countries around the world.
Speaker Change: We are working very hard to market that can do and to sell the monarch and the existing reactor.
Speaker Change: And to compete on the world stage with what's only really for the players that the French the trends.
<unk> technology in hours.
Speaker Change: So if we do see orders coming through which I believe would probably not be this year for new nuclear maybe next year.
Speaker Change: Those revenues will enable us to continue well beyond 2007.
Speaker Change: With secure revenues and secure.
Ian Edwards: So that's how it kind of is put all together. Chris, I don't know if that answers the question, but that's how we see it. Yeah, and just with the mix that's going to be in 2025, you know, any thoughts around the margin profile being kind of either towards the bottom or the top of the range?
Speaker Change: Orders in business.
Speaker Change: So that's that's how it kind of put all together, Chris I don't know if that answers the question, but thats, how we see it.
Yes, Justin.
Speaker Change: The mix is going to be in 25, any thoughts around the margin profile being calendar that's towards the bottom of the top of the range sure Jeff join us.
Jeffrey Bell: Sure, Jeff, do you want to? Yeah, so I think, you know, our view would be, you know, be in the range probably similar to what we saw in 2024. Although, Chris, you know, as we've talked about, the thing that may potentially move it around a little bit is the amount of procurement that we're doing for customers for for materials as these life extensions get going. And that can shift around a bit quarter by quarter. Now, I would say, you know, currently, it's looking in the first half of the year, like there's a strong desire from our a few of our customers to get ahead of some of that procurement.
Speaker Change: So I think our view would be would be in the range probably similar to what we saw in 2024, although Chris as we've talked about the thing that way potentially move it around a little bit is the amount of procurement that we're doing for customers for four.
Speaker Change: For materials as these.
Speaker Change: <unk> life extensions get going in that can shift around a bit quarter by quarter now I would say.
Speaker Change: Currently it's looking in the first half of the year.
Speaker Change: Like there's a strong desire from our a few of our customers to get ahead of some of that procurement. So.
Jeffrey Bell: So, you know, I think what you'll see is that flowing through into additional, you know, whole dollar EBIT and revenue, but that may that may pull down, you know, operating margins a bit in the first half of the year. Okay, fair enough.
Speaker Change: I think what Youll see is that flowing through into additional whole dollar EBIT and revenue, but that may that may pull down operating margins a bit in the first half of the year in particular.
Jeffrey Bell: And then my other question is just sort of the mechanics around the 407 sale. So maybe if you can walk through those a little bit, just so I understand this. So there's a couple of pieces that are closing, you know, so they're the two share purchase agreements. So if you could just maybe give us a little more color on on the expectations there, and I guess the sale to CPP is conditional. So if you can maybe walk through what that looks like. And, you know, what was the rationale for the the put call agreement as part of the Yeah, so you're absolutely right.
Speaker Change: Okay fair enough.
And then my other question just sort of the mechanics around the 407 sales. So maybe you can walk through those a little bit just so I understand this.
Speaker Change: So theres a couple of pieces that are closing.
Speaker Change: Sure.
Speaker Change: So they're the two share purchase agreements.
Speaker Change: So if you could just maybe give us a little more color on your expectations, there and I guess the the.
Speaker Change: The sale to CPP as condition also if you can maybe walk through what that looks like.
Speaker Change: And what was the rationale for the put call agreement as part of the transaction.
Speaker Change: Yes, so you're absolutely right. So if you kind of break the transaction down.
Jeffrey Bell: So if you kind of break the transaction down, about half of the transaction, the 3.3% with Ferrovial is payable and will close at the end of the period here between signing and closing. We would expect that to be in Q2. For both Ferrovial and CPPIB, there was a desire in terms of their kind of overall deployment of capital to really have a deferral option of up to 18 months. And so effectively, the second part of the transaction is really in two tranches, one for about $725 million and the other for $700 billion with CPPIB. And that additional $1.4 billion would be if they waited the full 18 months.
Speaker Change: Only half of the transaction and three the three 3% with.
Speaker Change: With Ferrovial.
Speaker Change: Is payable and will close at the end of the of the.
Speaker Change: The period here between signing and closing.
Speaker Change: We would expect that to be in Q2.
Speaker Change: For both for all wheel end and CPP IV.
Speaker Change: There was a desire in terms of their kind of overall deployment of capital.
Speaker Change: To really have a deferral option.
Speaker Change: Of up to 18 months and so.
Speaker Change: Actively the second part of the transaction.
Speaker Change: Is really in two tranches, one for about $725 million and the other for $700 million with them with CPP IB.
Speaker Change: And that would be.
Speaker Change: That additional $1 4 billion would be.
Speaker Change: If they work if they waited to full 18 months now.
Jeffrey Bell: Now, within what we've agreed with them is that we both have options, but if they chose to exercise the call option at the front end of that 18-month period, then there would be an adjustment and a discount for the time value of money. Okay. All right. And so right now, there's no real clarity on exactly other than inside the 18 months on on when some of those transactions Yeah, we think that, you know, at the moment, our view is that we would, you know, certainly expect, you know, the CPP IV investment, you know, to potentially, you know, be called not long after, you know, the closing period, you know, but they do have they and Ferrovial do have a do have an option around that.
Speaker Change: Within it within the what we've agreed with them as debt.
Speaker Change: We both have options, but if they chose to exercise the call option at the front end of that 18 month period.
Speaker Change: Then there would be an adjustment in a discount for the time value of money for that.
Speaker Change: Okay.
Speaker Change: Alright, and so break out Theres no real clarity on exactly other than inside the 18 months on on when some of those transactions of all time.
Speaker Change: Yes, we think that at the moment our view is that we would.
Speaker Change: Certainly expect.
Speaker Change: The CPP IB.
Speaker Change: Investment to potentially.
Speaker Change: Be called not long after the closing period.
Speaker Change: But then you have the end for OBL do have do have an option around that.
Jeffrey Bell: Okay. All right.
Unknown Executive: I'll leave it there. Thank you. Thanks.
Speaker Change: Okay, all right I'll leave it there. Thank you thank.
Bob: Thank you Bob.
Bob: Thank you.
Benoit Poirier: Our next question coming from the line of Benoit Poirier with this Jordan. Your line is open. Hey, good morning, everyone, and congrats on the 407 announcement this morning. On terms of cash flow from operating, this is where I would love to get more details on that. You expect to pull in excess of $300 million this year after advance payment on nuclear, so it seems to be far from street expectation right now. So could you talk a little bit more about what's driving the numbers, the moving parts, and related to the $526 million achieved in 2024, what was the amount of advance payment received on nuclear projects?
Bob: Our next question coming from the line of.
Speaker Change: <unk> with the Jordan Your line is open.
Speaker Change: Hey, good morning, everyone and congrats on the $4 seven announcement this morning.
Speaker Change: In terms of cash flow from operating this is where I would love to get more details on that.
Speaker Change: I expect you to pool in excess of 300 million this year after advance payment on nuclear.
It seems to be far from a street expectation right. Now so you could you talk a little bit more about what's driving the numbers the moving parts.
Speaker Change: And related to the $526 million achieved in 2024, what was the amount of advanced payments received on nuclear projects. So just trying to reconcile the moving parts due to get them, whether you're conservative in that.
Jeffrey Bell: So just trying to reconcile the moving parts to get and whether you're conservative in the $300 million number. Thank you. Yeah, sure. So you're absolutely right. In terms of the nuclear advances, which is, as I said in my presentation, was just around $100 million, a little over that, that we effectively received and hadn't worked off in 2024, but we would expect to work that off in 2025. So in essence, you have year over year around a $200 million swing. I think the other obvious thing we're seeing for the longer term, moving towards our 80% to 90% conversion of free cash flow to net income, that was very much without the cash flow drive from the LSTK project, and we are going to see that through 2025, as I indicated.
Speaker Change: 300 million number thank you.
Speaker Change: Sure so.
Speaker Change: So you're absolutely right in terms of the nuclear advances, which is as I said in my presentation was just around $100 million.
Speaker Change: <unk>.
Speaker Change: A little over that that we risk that we effectively received and hadn't worked off in 2024, but we would expect to work that off in 2025. So.
Speaker Change: In essence, you have kind of year over year.
Speaker Change: Around $200 million swing bandwidth.
Speaker Change: I think the other thing obviously, we are seeing for the longer term moving towards our 80% to 90%.
Speaker Change: <unk> a free cash flow to net income that was very much without the cash flow drag from the <unk> project.
Speaker Change: And we are going to see that.
Speaker Change: Through 2020 as I indicated.
Jeffrey Bell: You know, without those two elements, the, you know, the rest of the business or the underlying business, you know, it's converting, you know, net income to cash flow or, you know, generating operating cash flow in line with that 80 to 90% target that we laid out in our Okay, okay, that's great, caller. And with respect to margin, EBITDA margin per region, obviously, you gave some details about the US, how it was impacted by remediation costs, that basically explained the margin decline this year. So I would be curious if you would be able to quantify what was the remediation costs?
Speaker Change: Without those two elements.
Speaker Change: The rest of the business or the underlying business.
Speaker Change: Is converting net income to cash flow, we're generating operating cash flow in line with that 80% to 90% target that we laid out at our Investor day.
Speaker Change: Okay. Okay, that's great color and with respect to margin EBITDA margin per region. Obviously, you gave some details about the U S. How it was impacted by remediation costs.
Speaker Change: Basically explained.
Speaker Change: Margin decline this year, so I would be curious if you would be able to quantify what was the remediation costs and when we look at 2025 are there any regions that are more exposed to some potential remediation costs.
Jeffrey Bell: And when we look at 2025, are there any regions that are more exposed to some potential remediation costs? Yeah, sure. So I think in terms of the US, you know, we certainly would see that, you know, a little over 100 basis points. So that, you know, that would that would clearly give us an improvement, you know, heading into 2025. I think in terms of, you know, the rest of the regions, generally, you know, we, with all projects, you know, some of them, some of them outperform their, you know, their forecast and their, you know, their original selling margin, you know, some underperform that slightly.
Speaker Change: Yes, sure. So I think in terms of the U S.
Speaker Change: We certainly would see that in a little over 100 basis points of that.
Speaker Change: That would that would clearly give us an improvement.
Speaker Change: Heading into 2025.
Speaker Change: I think in terms of the rest of the regions generally.
Speaker Change: With all projects some of them some of them outperform there.
Speaker Change: Forecast in there their original selling margin.
Jeffrey Bell: It's just we had a couple that that were, you know, larger in scale in nature in the US than we would normally see. And so, you know, we made sure that we, we, you know, we took, we took the charges we needed against that, you know, but that that gives us a clear run through into 2025. I think that The There's the long range, 200 to 300 basis points improvement to the 17 to 18 in 2017. We're confident of getting there. Clearly, the 90 base points improvement in 2025 we're pleased with, we've committed to further improvement beyond that to 16 to 17% in 2025.
Speaker Change: Some underperform that slightly.
Speaker Change: We had a couple that were larger in scale in nature in the U S than we would normally see and so we made sure that we.
Speaker Change: We took we took the charges we needed against that.
Speaker Change: But that gives us a clear run through into 2025 I think.
Speaker Change: The.
Speaker Change: The long range two to 300 basis points.
Speaker Change: <unk> to the 72018 and 27, we are confident of getting there.
Speaker Change: Clearly the 90 basis points improvement in 'twenty five we're pleased with we are committed to further improvement beyond that to 16% to 17% in 2025 and.
Ian Edwards: And we've got these very specific Elements of the Margin Improvement Plan, which are around the use of technology, AI and digital tools, the reduction generally in overhead. ensuring that the backlog margin is strong, that where we're bidding, increase usage of the GTC, and then global collaboration across the company to reduce to increase utilization. So those things are kind of global initiatives, which various parts of the business are at various stages. But the plan is we'll get them all to the same place over a period of time. And of course, you know, there's always something like one-off occasionally that you'll see now that we're regionally reporting.
Speaker Change: We've got these very specific.
Speaker Change: Elements of the the margin improvement plan.
Which are around the use of technology, and AI and digital tools, the reduction generally and overhead.
Speaker Change: Ensuring the backlog margin is strong.
Speaker Change: We are bidding increased usage of the GTC.
Speaker Change: And then global collaboration across the company to reduce.
Speaker Change: To increase utilization rates.
Speaker Change: So those those things.
Speaker Change: Global initiatives.
Speaker Change: Which various parts of the business are at various stages, but the plan is we'll get them all to the same place over a period of time and.
Speaker Change: And of course.
Speaker Change: Theres always something like one off occasionally.
Speaker Change: Youll see now that we're regionally reported.
Ian Edwards: such as the U.S. where we have a quarter issue. But I think what I'm pleased about, what I'm confident about is the destination. because the plans are working and we're going to get where we need to be across the business. That's a great caller.
Speaker Change: Such as the U S.
Speaker Change: We have a quarter issue, but I think what I'm pleased about what I am confident about is the destination.
Speaker Change: The plans are working and we're going to get where we need to be across the business.
Ian Edwards: And maybe last one for me. Obviously, the acquisition of David Evans was announced. I'm very pleased with the announcement. Could you maybe speak a little bit about the historical organic growth profile of David Evans? And maybe if you could talk about what do you have in the bidding funnel for M&E for Atkins at this point? Yeah, I mean, I said this earlier, regardless of the sale of the 407, we have a plan. And that plan is about geographic expansion. And it's about building capabilities in the end markets that already exist. Now, we don't have, as you know, a full coast to coast business in the US.
Speaker Change: That's great color and maybe last one for me obviously the acquisition of David events.
Speaker Change: Announcer very pleased with the announcements could you maybe speak a little bit about the historical organic growth profile of David Evans, and maybe if you could talk about.
Speaker Change: What do you have in the bidding funnel for M&A.
We're talking at this point, yes.
No not Ive said Ive said this.
Speaker Change: Regardless of the sale of the 407, we have a plan.
Speaker Change: That plan is about geographic expansion and it's about building capabilities in.
Speaker Change: In the end markets that we're already exist now we don't have as you know a full coast to coast business in the U S.
Ian Edwards: This is a great acquisition to develop our West. We will still pursue other areas of the US from a geographic perspective. as well as potentially other geographers. where currently we have low pressure. where we believe the markets are strong and they play to our capability. We will also try and add capabilities. I mean, for example, we all know that the power renewables market across the globe is really active, and we will be actively looking for capability enhancement through that as an example. Now, key to all of this is We, we, we. really are rigorous in finding quality targets, quality customers that share our culture, that have got a track record of performance and business track record in relationships.
This is a great acquisition to develop our west we will still pursue other areas of the U S from a geographic perspective.
Speaker Change: As well as potentially other geographies, where currently we have low presence.
Speaker Change: We believe the market is strong then they play to our capabilities. We will also try and add capabilities for example.
Speaker Change: Paul.
Speaker Change: We all know that the power renewables market across the globe.
Speaker Change: Is really active.
Speaker Change: We will be actively looking for capability enhancement through that as an example, now key to all of this.
Speaker Change: It is.
Speaker Change: We.
Really our rigorous and finding quality targets quality customers that share our culture that have a track record of performance.
Ian Edwards: And David Evans fits right into that. You know, culturally, performance-wise, and what we see in this particular acquisition, which we intend to repeat, is really significant revenue synergy. When we put our global capability with their local presence, we can up the level of bidding projects immediately. And that marriage of the two together is really one plus one equals three. That's what we want to replicate. And that's what we want to be doing methodically, you know, regardless of how much funds have come out for us. specifically on the track record of David Evans. Jeff, maybe you can talk to that.
Speaker Change: Business track record in relationships and David Evans fits right into that.
Speaker Change: Culturally.
Speaker Change: Performance wise.
Speaker Change: And what we see in this particular acquisition, which we intend to repeat is really significant revenue synergies.
Speaker Change: When we put our global capability with a local presence.
Speaker Change: The level of bidding.
Speaker Change: Projects immediately.
That marriage of the two together is really one plus one equals three.
Speaker Change: That's what we want to replicate and Thats, what we wanted to be doing it methodically regardless of how much funds have come out at 407.
Speaker Change: Specifically on the track record of David Evans, Jeff Maybe you can you can talk to that yes.
Jeffrey Bell: Yeah, so the growth that David Evans has been generating themselves is very similar to the growth that we've been achieving in the last couple of years. So as Ian said, it kind of fits into the US business really well, very similar from an organic revenue growth rate with those additional opportunities in the pipeline, the combination of our global capability and their local customer relations.
Speaker Change: The growth that David Evans has been generating themselves.
Speaker Change: Very similar to the to the growth that we've been.
Speaker Change: <unk>.
Speaker Change: In the last couple of years, so as Ian said, it kind of fits into the U S business really well very similar from that from an organic revenue growth rate.
Speaker Change: Yes.
Speaker Change: Those additional opportunities in the pipeline the combination of our global capability in their local customer relationships.
Unknown Executive: Thank you very much for the time. Thank you.
Speaker Change: Thank you very much for the time.
Speaker Change: Thank you.
Maxim Sytchev: Our next question, coming from the line of Maxim... with NBF, Yolana Snalpen. Hi, good morning, gentlemen. Morning. And most questions have been asked already, but just a couple of quick ones for me. So just to confirm on sort of the M&A thought process, it's really around sort of medium size attack and something like nothing transformation, which is being contemplated at the moment. Is that is that accurate? It is. We're clearly. been working very hard over the last year or so, developing a pipeline developing the market. David Evans is the first of that sort of approach.
Speaker Change: Thank you.
Our next question coming from the line of Maxon.
Ed: Ed Your line is now open.
Speaker Change: Hi, good morning, gentlemen, good morning.
Speaker Change: Most questions have been asked already but just a couple of quick ones for me. So just to confirm on the M&A thought process, it's really around sort of medium size tuck in something like nothing transformation, which is being contemplated at the moment does that is that accurate.
Speaker Change: It is it is we're clearly.
Speaker Change: We are working very hard over the last year or so developing a pipeline develops in the market David Evans as the first.
Speaker Change: Okay.
Ian Edwards: And that is the typical deal that you would see, or even smaller, within the next 18 months or so. What happens beyond that, obviously, we'll be capability, building capacity, generating cash flows. We may move later beyond that into something more significant, but that's not the plan. Okay, no, that's, that's very helpful. Thank you.
Speaker Change: Sort of approach and that is.
Speaker Change: The typical deal that you would see or even smaller within the next 18 months or so.
Speaker Change: What happens beyond that obviously, we're building capability building capacity.
Speaker Change: Generating cash flows.
Speaker Change: We may move later beyond that.
The most significant but thats not the plan right now.
Ian Edwards: And then I'm wondering if it's possible to get a bit more color on links on? I mean, obviously, we see kind of the numbers that there was like a step up in terms of revenue generation, but what exactly drove that? And any update on what you're looking to do with this particular last Yeah, yeah, I mean, you know, pleased with the improvement plan. Revenues are up 70%. You know, we've got a margin out of it at 31 million in 2024. So we're really pleased. It's really about governance. So we own, you know, 51% of this asset or this company, we have a governance structure over it.
Speaker Change: Okay, that's fair.
Speaker Change: Very helpful. Thank you and then I'm wondering if it's possible to get a bit more color on the links on.
Speaker Change: I mean, obviously, we see that the number of symptoms like a step up in terms of revenue generation, but what exactly drove that and any update on what you are looking to do with this particular asset. Thanks.
Speaker Change: Yes.
Speaker Change: Pleased with improvement plan.
Speaker Change: Revenues are up 70%.
Speaker Change: We've got a margin out of 30.
$31 million in 2024, so we're really pleased it's really about governance.
51% of this asset this company, we have a governance structure over it.
Ian Edwards: And we have worked hard with the teams within the business. to focus on high-growth markets, high-margin clients, good-paying clients. The overall market for energy companies like this is good. So we're pleased with where we've got to and we will be looking for a further improvement even as we move into 2025. We're still in the process of divesting. There is nothing to announce or nothing to kind of announce imminently. But ultimately, the goal is to divest this business. It has an element of lonesome work in it. And as you know, we don't do that anymore. So ultimately, it doesn't really fit with the family of portfolio businesses that we want to take forward.
Speaker Change: We have worked hard.
Speaker Change: Whereas the teams within the business.
To focus on high growth markets high margin clients good paying clients.
Speaker Change: The overall.
Speaker Change: Market for energy companies like this is good.
Speaker Change: So we're pleased with where we've got to and we will be looking for further improvement even as we move into 2025.
We're still in.
Speaker Change: We're still.
Speaker Change: In the process of.
Speaker Change: Divesting.
Speaker Change: There is nothing to announce or nothing to kind of.
Speaker Change: Announced imminently, but ultimately the goal is to divest this business.
Speaker Change: As an element of that.
Speaker Change: Lots of work in that and as you know, we don't do that anymore. So so ultimately it doesn't really fit with the family of the portfolio of businesses that we want to take forward.
Unknown Executive: Okay, well, fair enough.
Unknown Executive: That's from me, thank you so much. Thank you.
Speaker Change: Okay, I'll turn it off Thats from me. Thank you so much.
Michael Tupholme: Our next question coming from the line up. Michael Tupholme with TD Common. Your line is now. Thank you, good morning. Earlier, you talked a little bit about nuclear and Monarch versus the EC6. Just wondering if you can provide an update on... Where things stand as far as progress on the development of Monarch, what's what's been accomplished and what's left to to do as far as that develops? Yeah, no, for sure. So we actually passed what we call the initial development phase, which is a, I mean, this thing is all about real engineering and building. the details of engineering such that the product is deployable and buildable and that it can pass the regulatory environment.
Speaker Change: Thank you.
Speaker Change: Next question coming from the line of.
Speaker Change: Michael <unk> with TD Cowen Your line is now.
Speaker Change: Thank you good morning.
Speaker Change: Good morning.
Earlier, you talked a little bit about nuclear in monarch versus <unk> six I was wondering if you can provide an update on <unk>.
Speaker Change: Where things stand as far as progress on the development of monarch.
Speaker Change: What's been accomplished and what's left to do as far as that development work Yeah no.
Speaker Change: For sure. So we are actually past, what we call the initial development phase which is.
Speaker Change: This thing is all about.
Speaker Change: Real engineering and <unk>.
Speaker Change: Building.
Speaker Change: The details of engineering such that.
Speaker Change: That product is deployable available and that it can pass the regulatory environment.
Ian Edwards: So we're past the first phase, and that was a milestone. We passed it on to expectations, both from a cost and a time perspective. So I'm pleased with the progress the team is making on this. I'm very pleased with the support that we have from the federal government for the loan against both CanDo and the Monarch development. I think that shows, for me, a significant support for deployment domestically and internationally of the indigenous Canadian technology. I mean, that's almost more important than the loan, frankly. It's just to get that signal that, you know, the government believes in this technology.
Speaker Change: So we're past the first phase and that was a milestone.
Speaker Change: We pass it on.
Speaker Change: Two expectations, both from a customer or time perspective.
Speaker Change: I am pleased with the progress the team is making on this.
Speaker Change: I'm very pleased with the support that we have from the federal government.
Speaker Change: For the loan against both can do on the monarch development I think that shows for me a significant support for deployment domestically.
Speaker Change: And internationally.
Speaker Change: The indigenous Canadian technology.
Speaker Change: I mean, that's almost more important than alone frankly is just to get that signal.
Speaker Change: The government believes in this technology.
Ian Edwards: So, we will continue the development of the Monarch. It'll be 27, but frankly speaking, that will be available for when our domestic customers need it. Because in any of the... Even if we're going to order today, there's specific project permitting requirements that would take longer than the completion of our development of this asset. And that's what we've timelined the whole thing on. So, we need to be ready for customers when they need it. Okay, got it. That makes sense. Thank you.
Speaker Change: So we will continue the development of the monarch.
Speaker Change: It will be 27.
Speaker Change: But frankly speaking that that will be.
Speaker Change: Available for when our domestic customers need it.
Speaker Change: Then any of the.
Speaker Change: Even if we got an order today.
Speaker Change: This specific project permitting requirements that would take longer than the completion of our development of this asset and that's what we've timeline the whole thing so we need to be ready for customers when they need it.
Okay got it that makes sense. Thank you.
Ian Edwards: And then maybe just a couple of questions for for Jeff around LSTK and cash flow. So I might have missed this, but I think you described the the LSTK loss in the quarter as relating in part to Eglinton or entirely. I'm not sure if you can just clarify why. What exactly drove it as far as which project and then also from a cash perspective, what was the actual impact? In terms of LSDK on cash flow in the quarter and the full year 2024, if you can talk about that. I'll let Jeff talk to the cash flow, but I just want to, I mean, obviously, we are, we were disappointed.
unknown: And then maybe just a couple of questions for Jeff.
unknown: Round, LST K and cash flow, so I might have missed this but.
unknown: Thank you described the Alice Teekay loss in the quarter as relating in part tackling tenor entirely I'm not sure. If you could just clarify.
unknown: What exactly drove it as far as which project and then.
unknown: Also from a cash perspective, what was the actual impact.
unknown: In terms of our SDK on cash flow in the quarter and the full year 2024, if you can talk about that.
unknown: I'll, let Jeff talk to the cash flow I, just want to I mean, obviously.
unknown: We were.
Ian Edwards: I mean, we hit two challenges beyond the normal overhead run rate that we've been incurring over the past two years. And those two challenges, one was putting Trillium into operation, there were costs associated to closing out the commissioning, closing out defects, closing out the paperwork so that the permits and the regulatory environment could put the asset into operation. The good news, if you can say that, of that challenge, is that railway is now in operation and is working really well. So that's one down, another one down, almost two to go, so to speak. The other is that from that experience, we put some extra provisions against Eglinton.
unknown: Disappointed.
We hit too.
unknown: Challenges beyond the normal overhead run rate that we've been incurring over the past two years.
unknown: And those two challenges one was.
unknown: Putting trillium into operation there were costs associated to closing out the commissioning closing out defects closing out the paperwork. So.
unknown: The permits and the regulatory environment could put the asset into operation.
unknown: Good news.
unknown: You can say that.
unknown: Of that challenge.
unknown: Railway is now in operation and is working really well. So that's one down another one down almost two to go so to speak.
unknown: The other is that from that experience.
unknown: We put some extra provisions against Eglinton.
Ian Edwards: because we believe that our obligations there and our work is going to be finished in summer and we just want it to be, you know, provided for what comes to get it to there in summer. And the REM, as you know, has always gone well for us. So, you know, we're almost at the end of this permanently. And on the cash flow side, Jeff? Yeah, so I think what I'd say is that, you know, as ever, the charge we took in the quarter, the 84 million, is a combination of actual costs incurred in the quarter, but also forward estimates of costs to complete the project.
unknown: Because we believe that our obligations there.
unknown: And our work is going to be finished in soma.
unknown: Just wanted to be.
unknown: Provided for what comes.
unknown: To get it to there and somewhat on the Rems.
unknown: As always gone well for us so so.
unknown: We're almost at the end of this.
unknown: Evidently and on the cash flow side, Jeff, Yes, So I think what I'd say is dead.
unknown: As ever the charge, we took in the quarter the $84 million.
unknown: It's a combination of actual costs incurred in the quarter, but also forward estimates of cost to complete the project.
Jeffrey Bell: And so what I would say is in the quarter, it was probably about half and half. You know actual cash in the quarter and cash outflow that will come, you know, through the first part, the first half of this year.
unknown: So what I would say is it is in the quarter it was probably about half and half between.
unknown: Actual cash in the quarter and cash outflow that will come through to the first part the first half of this year.
Jeffrey Bell: Okay, perfect. And then just focusing on 2025. Did you say that the Expected quarterly EBIT. Loss in LSTK should be $10 to $20 million per quarter throughout 2025? Yes, that's correct. Okay, and then putting kind of that together with what you just said a moment ago about, you know, half of the Half of the $84 million fourth quarter is actually cash for 2025. Is that sort of representative of the entire cash impact in 2025 from LSTK, or is there more that we should be thinking about over and above half of that 84 million? Yeah, I think I mean, what I what I said in my remarks was that we would expect 2025 from an LSTK perspective to be broadly similar to what it was in 2024.
unknown: Okay, perfect and then just focusing on 2025.
unknown: Did you say that the.
unknown: Expected quarterly EBIT.
Speaker Change: Los <unk>, teekay should be $10 million to $20 million per quarter throughout 2025.
unknown: Yes, that's correct.
Okay, and then putting that together with what you just said a moment ago about.
unknown: Half of the.
unknown: Half of $84 million fourth quarter.
unknown: Is actually cash for 2025 is that sort of representative of the entire.
Speaker Change: Cash impact in 2025 from Alice Teekay or is there more that we should be thinking about over and above.
Speaker Change: Half of that $84 million, Yeah, I mean, what I, what I said in my remarks was that we would expect 2025 from announced on a ticket perspective to be broadly similar to what it was in 2024.
Jeffrey Bell: And you can see on one of the slides in my presentation that for the full year, that was about $130 million. So kind of in that, it could be a little less could be a little more, but you know, roughly of that type. Okay, perfect.
Speaker Change: And you can see on one of the slides in my presentation that for the full year that was about $130 million so kind of in that.
Speaker Change: It needs to be a little less could be a little more but roughly of that cyclical nature.
Unknown Executive: I will leave it there. Thank you.
Speaker Change: Okay perfect I'll leave it there thank you.
Kevin: Kevin coming from the line of.
Unknown Executive: and James Yolanda. Good morning. Just a quick one for me. I wanted to go back to the David Evans acquisitions and wondering if you could explain the rationale behind acquiring only 70% of the business and when would you expect to bring that ownership up to 100%? Thank you. Yeah. I mean, so it's our first acquisition. I think that's for some time. I think that's a well-established brand and a very well-established company on the West Coast, on the West of the US. Our presence on the West is not that strong currently. So, we felt an approach where we have a period of time.
Kevin: Boston with Diamond James Your line is now open.
Speaker Change: Good morning, just a quick one from me wanted to go back to the David Evans acquisition and <unk>.
Speaker Change: Wondering if you could explain the rationale behind the acquiring only 70% of the business and when.
Speaker Change: Would you expect to bring that ownership up to 100%. Thank you.
Speaker Change: Yes.
Speaker Change: So it's our first acquisition I think that for some time I think that's the first thing.
Speaker Change: I'd say, it's a very very.
Speaker Change: Well established brand and a very well it sounds like companies on the West coast on the west of the U S.
Speaker Change: Presence on the West is is not that strong currently.
Speaker Change: So we felt an approach where we have a period of time.
Ian Edwards: where we kind of almost, you know, support joint venture, expand on the revenue synergy would be good from an integration perspective. And then obviously, over a period of time, we will acquire the remaining portion and fully integrate. So that's the rationale. There is obviously an end stop to the time period, which allows us to acquire, but I would expect that this will happen sooner rather than later, because everybody will see the benefit of working together. And that's already starting to happen, frankly. Is that okay? Yes, thank you. Yes, okay.
Speaker Change: We kind of almost support joint venture expand on the revenue synergy would be good from an integration perspective, and then obviously over a period of time.
Speaker Change: We will acquire the remaining portion and fully integrate.
Speaker Change: So that's the rationale.
There is obviously.
Speaker Change: And then stopped for the time period.
Speaker Change: Which allows us to acquire but I would expect that this will happen sooner rather than later because.
Speaker Change: We will see the benefit of working together.
Speaker Change: And that's already starting to happen frankly.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes. Thank you.
Unknown Executive: Thank you.
Okay. Thank you.
Yes.
Jonathan Goldman: Our next question coming from the line of Jonathan Goldman. Woodscotch Bank. Your line is open. Hi, good morning, guys, and thanks for taking my questions. Most of them have already been asked, but maybe just two quick ones from me. The guidance for the cadence of organic growth in engineering services to be back halfway to this year, is that just mainly a ComBank issue? Yes, Jeff, that's exactly right, is that, you know, those comp issues that we talked about in Q4, you know, and said, you know, those would kind of carry on into Q1. You know, as we get into Q2 and beyond, you know, those comp issues, you know, fall away and then the natural underlying organic revenue growth that we're generating, you know, will kind of emerge.
Jonathan Goldman: Our next question coming from the line of Jonathan Goldman.
Speaker Change: With Scotiabank your line is open.
Speaker Change: Hi, Good morning, guys and thanks for taking my questions. Most of them have already been asked but maybe just two quick ones from me.
Speaker Change: The guidance for the cadence of organic growth in engineering services to be back half weighted this year is that just mainly a comp issue.
Speaker Change: Yes, Jeff.
Speaker Change: That's exactly right is that those comp issues that we talked about in Q4.
Speaker Change: Ted.
Ted: Would kind of carry on into Q1.
Speaker Change: As we get into Q2 and beyond.
Speaker Change: Those comp issues fall away and then the natural underlying organic revenue growth that we're generating.
A couple of big moving parts, like the Middle East contract, the second phase that's been delayed, and a big battery factory that was in Q4-23, Q1-24, coming out, but no concerns on the underlying growth. Okay, got it. And the second one on LFTK, you gave some guidance around quarterly loss run rates for 2025. But do you think anything could spill into 2026 above and beyond that? So with the Certainly the issue on Eglinton is that putting the asset into operation is not our call, it's obviously the government's call, but we're pretty clear on what we need to do to complete and close out our work.
Speaker Change: We will kind of emerge couple a couple of big moving parts.
Speaker Change: Middle East contract the second phase has been delayed.
Speaker Change: A big battery factory.
Speaker Change: Was in Q.
Q4, 'twenty three Q1 'twenty four.
Speaker Change: Coming out, but no concerns on the underlying growth.
Speaker Change: Okay got it and the second one on Alex Teekay, you gave some guidance around quarterly.
Loss run rate for 2025, but do you think anything could spill into 2026 above and beyond that.
So.
Speaker Change: The.
So the issue on exits and it's putting the asset into operation is now our cohorts.
Speaker Change: Obviously the government's coal.
Speaker Change: We are pretty clear.
Speaker Change: What we need to do.
Speaker Change: To complete and close out our.
Um, so We are pretty confident. Yeah, pretty confident that we will close out our work this year and then They're not this this whole cannibality episode behind. Would it be fair to say that the quantum of losses or cash flows would probably be in the range you're expecting, but timing could shift depending on the things you just mentioned? Yeah, constant should be where it is. Cashflow timing, Jeff? Yeah, it could it could move around a little bit. You'd expect kind of more, you know, particularly leading up to the, you know, the completion of our work, as we said, in, you know, in the middle of the year, you know, summer, you know, so probably, you know, would start to reduce.
So.
Speaker Change: We are pretty confident.
Yes, pretty confident that we will close out our this year and then.
Speaker Change: Then this whole kind of LTE episode behind Us.
Speaker Change: Will it be fair to say that the quantum of losses or cash flows would probably be in the range youre expecting but timing could shift depending on the things you just mentioned.
Speaker Change: Yeah constant should be where it is cash flow timing, Jeff yes, it could it could move around a little bit you would expect kind of more.
Speaker Change: Particularly leading up to the.
Speaker Change: Completion of our work as we said in the middle of the year summer.
Speaker Change: So it probably would start to reduce in the second half of the year, but we still have supply chain to fill in to kind of payout.
But we still have supply chain to fill, you know, to kind of pay out and settling a final account. So the quantum cash flow, for sure, but probably a bit more in the first half. Okay, makes sense. Thanks for taking my questions.
Speaker Change: Settling a final account so constant cash flow for sure, but probably a bit more in the first half of the second half.
Speaker Change: Okay makes sense, thanks for taking my questions.
Speaker Change: Yeah.
Speaker Change: And I'm showing no further questions I will now turn the call back over to Denis Jasmine for closing remarks.
Welcome back over to Denis Jasmin Focus. Thank you very much for having joined us today. If you have further questions, please do not hesitate to contact me anytime today or tomorrow. Thank you very much and have a beautiful day today. Thank you.
Denis Jasmine: Thank you very much for joining us today.
Speaker Change: For your question Q2, nothing safety contact me inside of today and tomorrow. Thank you very much and I'll review Fovista.
Denis Jasmine: Thank you.
This concludes today's conference call. Thank you for your participation. You may now disconnect.
Denis Jasmine: This concludes today's conference call. Thank you for your participation you may now disconnect.
Denis Jasmine: Okay.
Denis Jasmine: [music].
Yes.
Denis Jasmine: [music].