Q1 2025 AtkinsRéalis Group Inc Earnings Call
Thank you for standing by and welcome to Atkins reality first quarter 2025 results conference call.
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 one on your telephone.
As a reminder, this call is being recorded.
I would now like to introduce your host for today's conference Denise Jasmine Vice President of Investor Relations you may begin.
Speaker Change: Thank you Danielle.
Denise Jasmine: Good morning, everyone and thank you for joining us today for.
Denise Jasmine: But those studying and we invite you to go to slide presentation that we have posted in the investors section of our website, which we will refer to during this call for todays.
Denise Jasmine: Today's call is also webcast.
Denise Jasmine: With me today are unit words, Chief Executive Executive Officer, and Jeff <unk>, Chief Financial Officer, before we begin I would like to ask everyone to limit themselves to one or two questions. So I'm sure that Oh, and then there's other parts of the spot space.
Denise Jasmine: Welcome to return into the queue for any follow up questions.
Denise Jasmine: We'd like to draw your attention to slide two comments made on today's call may contain forward looking information.
Denise Jasmine: This information by its nature is subject to assumptions risks and uncertainties and as such actual results may differ materially from the views expressed today.
Denise Jasmine: For further information on these assumptions risks and uncertainties. Please consult the company's relevant filings on SEDAR plus these documents are also available on website.
Denise Jasmine: Also during the call we may refer to certain non <unk> financial measures.
Denise Jasmine: The creation of these amounts to the corresponding.
Denise Jasmine: Financial measures.
Speaker Change: Selected and are reflected in our earnings release, and MD&A, which can be found at our website now I'll pass the call over to Europe.
Speaker Change: Thank you Tony Good morning, everyone and thanks for joining us today.
Speaker Change: I'm going to begin today's call by providing an overview of our performance for the last quarter.
Speaker Change: Our continually growing backlog and the current success and opportunities we are seeing across our engineering services regions. A nuclear businesses I will then pass it to Jeff to provide more detail on our financial results before we open it up for Q&A.
Jeff: So let's get started on slide three.
Jeff: We had a strong quarter with significant organic revenue growth at kids reality services total revenue organically increased 10% to $2 $5 billion.
Jeff: Engineering services regions revenue organically declined 4% to $1 $7 billion, while nuclear revenue organically grew 77% to a quarterly record high of $538 million.
Jeff: Links on revenue organically grew 36%. We also had a strong increase in EPS and adjusted EBITDA with Atkins reality services segment, adjusted EBIT, increasing 20% to $224 million.
Jeff: All of this has resulted in $39 million of positive operating cash flow this quarter.
Jeff: And our balance sheet remains strong with a one one times net leverage ratio at the low end of our long term target range.
Jeff: We continue to execute our three year strategy and took further steps in the first quarter as we announced an agreement to sell our interest in the highway 407.
Jeff: <unk> acquired a majority stake in David Evans.
Jeff: I am proud of the recent highlights of the culture. We are building at Atkins realize we were recently named one of the top employers in Montreal and recognized as a great place to work in the U S.
Jeff: On slide four you can see the continued progression of our backlog growth across Atkins reality services.
Jeff: The 32% increase over the prior year was driven primarily by continued growth in nuclear which achieved a $5 billion backlog for the first time in our history.
Jeff: And growth in our engineering services regions of Canada, UK, and Ireland U S. In L. A.
Jeff: Particularly in the transport market.
Jeff: And nuclear we entered into a multibillion dollar agreement through our joint venture for Ontario's Pickering nuclear generating station life extension.
Jeff: Unsecured and additional contracts to complete the react to life extension of unit one can do reactor at the Senate Botha nuclear power plant in Romania.
Jeff: This follows our signing last quarter to build two new can do reactors at sign of OTA.
Jeff: In engineering services, we will be delivering the east Harbor transit hub in Toronto, and the U S. A land and expand strategy continues to yield results as we have now been contracted to manage the San Francisco Airport improvement program and in the UK, we're playing an integral role in the east.
Jeff: <unk> digital program to support the delivery of the world's most complex digital railway transformation.
Jeff: Significant backlog growth across the majority of our regions.
Jeff: And capabilities highlights our role as a trusted partner and supporting the global energy transition.
Jeff: <unk> infrastructure.
Jeff: Turning to slide five as we anticipated revenue declined on an organic basis in our engineering services business.
Jeff: Mainly due to a difficult year over year comparison following strong performance in Q1 2024.
Jeff: Completion and delays of two projects also weighed on these results.
Jeff: Segment adjusted EBITDA over net revenues margin was just under 15% for the first quarter roughly flat versus the prior year.
Jeff: Notably we continue to increase our backlog, which now stands at $12 7 billion.
Jeff: Representing a 6% increase versus the backlog as of March 31, 2024, underpinning our view that demand for our services remains strong.
Jeff: Beginning on slide six we provide an overview of each of our four regions and their performance in Q1 2025.
Jeff: And Canada backlog increased 9% year over year, mainly due to transportation and power renewable contract wins.
Jeff: Revenue declined 14% organically in the first quarter, mainly due to the completion of a large project in the second quarter of 2024, which had a high percentage of flow through costs.
Jeff: The remaining business continues to perform well as shown by the increase in net revenue.
Jeff: Segment, adjusted EBITDA was $22 million flat year over year with an 11% margin. We are committed to enhancing margins and have implemented initiatives that are expected to yield an annual year over year improvement.
Jeff: Despite softness in growth revenue the past few quarters, we are bullish on our engineering services prospects in Canada as the government continues to make commitments towards infrastructure and hydro power investments.
Jeff: In the meantime, we are focused on increasing our presence in Ontario, and Western Canada, and strengthening our position across several high growth end markets.
Jeff: In the UK and Ireland revenue grew 3% organically year over year, driven primarily by volume growth in rail within the transportation market as well as in defense and the water markets.
Jeff: Segment, adjusted EBITDA grew to $89 million in the quarter, representing a nearly 17% EBITDA margin due to the results of our continuous improvement plan focused on efficient project delivery.
Jeff: Backlog grew 9% year on year to approximately $1 8 billion driven.
Jeff: Driven by sizable wins in transportation and defense.
Jeff: Although details surrounding the June UK government spending review remains we are optimistic about the new budget and that 10 year infrastructure strategy.
Jeff: The foundation and the end market diversity, we have built and the reach and overtime has positioned us well to meet our customers' needs.
Jeff: In a water market, we are building on our historically strong delivery with major water companies as we enter the new funding cycle.
Jeff: In aviation, we continue to see strong demand for our services driven by capital programs at Heathrow, enabling us to deliver comprehensive integrated solutions.
Jeff: Looking ahead, our recent rail wins highlight our commitment to innovation and excellence and secures our position in the rail sector.
Jeff: Turning to slide eight.
Jeff: U S land and expand strategy continues to make strides.
Jeff: We recently closed on the acquisition of a major stake in David Evans achieved a U S engineering record backlog in Q1, and our pipeline of opportunities remains strong.
Jeff: For the first quarter revenue organically declined 1% year over year as strong growth in our U S Engineering services business, particularly in transportation infrastructure and the industrial markets was offset by a decrease in our global minerals and metals sector.
Jeff: Segment, adjusted EBITDA was $47 million slightly above first quarter 2024 results backlog increased 6% year over year to nearly $1 7 billion as.
Jeff: As we continue to prioritize client engagement and leverage our unique end to end capabilities.
Jeff: Our 6000 U S employees are focused on expanding our footprint across the country on.
Jeff: On the West Coast, we are taking our expertise in airports to California, while in the southwest we are continuing to secure key wins with transportation work in Florida, North Carolina and Texas.
Jeff: Our business is historically resilient during times of economic uncertainty, we are not directly impacted by tariffs and where minimally exposed to federal agency contracts. We remain believers in the long term growth prospects of our end markets as long term infrastructure.
Jeff: Our investments continue to be strong, particularly in transportation.
Jeff: We'll also continue to utilize our strong balance sheet and growing cash flow to enhance our footprint.
Jeff: Looking ahead, we're excited to leverage our David Evans colleagues capability and to further develop the west coast opportunity pipeline, while also focusing on enhancing already growing presence on the east coast.
Jeff: In EMEA.
Jeff: During the first quarter revenue declined 9% on an organic basis and segment adjusted EBITDA declined to $26 million.
Jeff: Representing a 14% margin open net revenue.
Total backlog in EMEA was approximately $1 3 billion.
Jeff: Around 12% versus the first quarter of 2024.
Jeff: The declines in revenue or backlog were expected as the first phase of a major buildings in place. This project in the Middle East was completed at the end of last year.
Jeff: We expect to continue to grow in the region overtime, but a more moderate rate demand for our capabilities remained strong evidenced by our recent award of the lead architect on the groundbreaking projects at the Corinthian Dubai.
Jeff: In Asia backlog has continued to grow and we're seeing increased investments in infrastructure and transportation, specifically with the development of the Hong Kong Northern Metropolis.
Jeff: In Australia, we are focused on expanding our presence through opportunities in transportation defense power and grid infrastructure to ultimately deliver long term growth.
Jeff: I'd like to now move to slide 10, and the results of our nuclear business.
We continue to demonstrate significant growth achieving an organic revenue increase of 77% compared to the first quarter of 2024.
Driven largely by can do life extension wins and further growth in our nuclear services business in the UK and the U S.
Jeff: Nuclear backlog is now $5 2 billion.
Jeff: 185% higher than our backlog.
Jeff: March 31 2024.
Driven primarily from life extension bookings and the can do fleets.
Jeff: Segment, adjusted EBIT grew 61% to $63 million in the first quarter and the segment adjusted EBIT margin was approximately 12%.
Jeff: On slide 11, we highlight the achievements across our nuclear can do and services portfolios.
Jeff: And Ah can do business, we're making excellent progress on life extension projects and new barrels.
Jeff: In Romania as I noted earlier, we were awarded the contract for Phase II of the life extension work is so Nevada, Seawall and <unk>.
Jeff: Canada, we entered into a multibillion dollar contract for phase one of can do life extension work at the Pickering nuclear generating station.
Jeff: Last quarter, we also highlighted the $304 million financing from the Canadian government to develop can do technology, including monarch and <unk>.
Jeff: Canada and for Canada.
Jeff: This further solidifies the government's focus on homegrown technology, which only we possess.
Jeff: Our commitment to build a more sustainable future for Canada.
Jeff: Opportunities for our can do expertise abound across many of the regions in which we operate.
Jeff: As we continue to grow it is vital to do so more efficiently and as such we've concluded vendor agreements with eight companies in Canada to strengthen our supply chain, we will continue to enhance our operational capabilities under our program to deliver excellence.
Jeff: And our services business Newbuild support and decommissioning services work continues to drive growth in the U K region.
Jeff: In addition to our decommissioning work at Sellafield, we reached a major milestone with the successful robotics trial.
Jeff: This accomplishes three clear things.
Jeff: It opens the possibility for remote access.
Jeff: It enhances safety.
Jeff: And an increase of security at nuclear sites. This is a really exciting development that was achieved through our investment in innovation.
Jeff: Additionally, we continue to land and expand our new capabilities in the U S. As we have formed a joint venture with strategy to support various missions for the department of energy.
Jeff: Our nuclear capabilities and expertise.
Jeff: Are a source of unique competitive advantage.
Jeff: Four and a half thousand of my colleagues are solely focused on nuclear.
Jeff: Which we're also supplementing with the skills and talent.
Additional 1000 people.
Jeff: Across the rest of Atkins rabbits.
Jeff: We continue to position extremely well to take advantage of the ongoing nuclear super cycle.
Jeff: Our first quarter nuclear performance provides a strong foundation for 2020 fives and.
Jeff: And as such we are raising our full year revenue outlook to a range of $1 9 billion to $2 billion.
Jeff: And looking out we see continued growth for this business and now believe by 2027.
Jeff: Annual nuclear revenue will be in the range of $2 2 billion.
Jeff: So $2 5 billion.
Jeff: Turning to slide 12, I want to further highlight the near term and long term can do revenue opportunities within our nuclear business.
Jeff: The potential contracts you see on this slide represent a massive opportunity for Atkins rabbits, and underpin our view.
Jeff: There is significant growth for the foreseeable future.
Jeff: These represent profitable contracts and highlight real backlog with real teams in place who are delivering real work every day.
Jeff: A $5 billion nuclear backlog achievement is just the beginning as our customers continue to recognize nuclear expertise.
Jeff: Total backlog does not include follow on stages of our recent wins and only a very small amount of Canada can do new builds.
Jeff: We cannot overstate, our belief and the significant opportunity in front of Atkins railroads in the nuclear sector.
Jeff: Now moving to slide 13, and I'll link some LST K and capital businesses.
Jeff: Our links on segment revenue grew organically, 36% year over year.
Jeff: Strong volume momentum from 2024.
Jeff: Links on realized 340 basis points of EBIT margin expansion in the first quarter as operational improvements continue to positively positively flow through the business back.
Jeff: Backlog increased 52% to a record high of $2 2 billion at.
Jeff: At the end of the quarter.
Jeff: Across all regions, we're seeing volume increases and continued backlog quality improvement, adding profitable growth for this segment.
Jeff: I'll now lets Teekay project segment adjusted EBIT was in line with expectations as we indicated last quarter. The Trillium line went into operation in January and come in.
Jeff: On Eglinton in Ontario is progressing well.
Jeff: Backlog decreased 33% year over year, primarily now consisting of the Ram project.
Jeff: On capital capital, we did not receive dividends for highway 47 during the first quarter of 2025, but the other assets performed well.
Jeff: I'll now turn it over to Jeff to discuss the financial results and the 2025 outlook.
Jeff: Thank you Ian and good morning, everyone.
Jeff: Turning to slide 15.
Jeff: Revenues from professional services and project management increased 12% year over year totaling $2 5 billion.
Jeff: Which included a revenue increase of $322 million for our services business and a decrease of $48 million in the <unk> Teekay project segment as we are completing the remaining projects.
Jeff: Total segment adjusted EBIT for the quarter increased 25% to $219 million and was composed of $224 million for Atkins Railroad services.
Jeff: $10 million for capital and a negative EBIT of $15 million for Alice Teekay projects.
Jeff: Corporate SG&A expenses from <unk> totaled $38 million in the quarter slightly below Q1 2024.
Jeff: We would expect these quarterly expenses to reduce to reduce during the year and therefore continue to anticipate that the corporate SG&A from <unk> should be between 120 $130 million for the full year 2025.
Jeff: Restructuring costs were $24 million higher than the first quarter of 2024, mainly due to operational restructuring in our UK and Ireland region. As we are realigning some of our capabilities and our business operations with the expected future growth end markets in line with our delivering excellence driving growth.
Jeff: <unk>.
Jeff: We expect these costs to be approximately $50 million for the full year 2025.
Jeff: In line with 2024.
Jeff: The <unk> net income this quarter increased by 50% to $69 million.
Jeff: Compared to $46 million in Q1 2024.
Jeff: Adjusted EPS from <unk> for the quarter increased to 57 per diluted share compared to <unk> 42 in the first quarter last year.
Jeff: And our backlog ended the quarter at a record high of $20 4 billion.
Jeff: 31% higher than at the end of March 2024, with strong book to Bill ratios in the engineering services nuclear Enlink some segments.
Jeff: We now move on to slide 16, and free cash flow.
Jeff: Net cash generated from operating activities totaled $39 million for the quarter in line with the first quarter last year.
Jeff: This is mainly driven by a stronger Atkins reality service business EBITDA delivery and lower cash outflows for the LST K projects.
Jeff: Offset by higher working capital position usage.
Jeff: We continue to expect operating cash flow to be in excess of $300 million for the full year of 2025.
Jeff: And the cash generation to be more weighted towards the second half of the year with a similar a similar profile to 2024.
Jeff: After capex of $31 million, which included $15 million for the development of monarch in the first quarter and the payment of lease liabilities of $22 million.
Jeff: Our free cash flow stood at negative $14 million for the quarter.
Jeff: <unk> strong at the end of the quarter with a net recourse and nonrecourse debt to adjusted EBITDA of $1 one at.
Jeff: At the lower end of our 1% to two times target range.
Jeff: We are also pleased with the recent update of our credit rating from <unk> to investment grade triple below with a positive outlook.
Jeff: I'd like to now turn to my final slide Slide 17.
Jeff: As you have heard in sand nuclear this end market is very strong the demand for our services continues to grow and our backlog is at a record high.
Jeff: Therefore, we are increasing our nuclear organic revenue outlook to between one nine and $2 billion for the full year 2025 from the previous range of between $1 6 billion and $1 7 billion.
Jeff: We're also adjusting the nuclear adjusted EBIT to gross revenue ratio outlook for the full year 2025 to between 11 and 13% from the previous range of between 12 and 14%.
Speaker Change: <unk> of the expected 2025 business mix.
Speaker Change: All other financial outlook metrics for the full year 2025 issued in the Q4 2024 press release are maintained.
Speaker Change: With that I'll now hand, the presentation back to Ian Thank.
Ian: Thank you Jeff.
Speaker Change: We had a strong start to the year.
Speaker Change: The energy transition and infrastructure development needs remain at the forefront of public entities across the globe.
Speaker Change: This is fueling growth in our markets, where we have either built a strong foundation for our landing and expanding at a rapid pace.
Speaker Change: Our focus is simple.
Speaker Change: Deliver excellence and drive growth.
Speaker Change: This strategy is built on optimizing the business to drive profitable growth accelerating our footprint and growing end markets and regions.
Speaker Change: And exploring untapped opportunities across the organization.
Speaker Change: We have a strong balance sheet.
Speaker Change: Supported by positive cash flow.
Speaker Change: And a disciplined capital allocation framework that will enable us to deliver on our growth organically and inorganically.
Speaker Change: Before opening up for questions I want to thank our 40000 employees, including our newest members from David Evans for their hard work and dedication.
Speaker Change: We're off to a great start and are excited by the opportunities in front of us that we will capture in 2025 and beyond.
Speaker Change: With that let's open up for questions.
Speaker Change: Thank you if you have a question at this time. Please press the star one key on your Touchtone telephone.
Speaker Change: One moment for our questions.
Speaker Change: Our first question comes from Chris Murray with ATB capital markets. Your line is open.
Chris Murray: Yes, thanks folks good morning.
Speaker Change: Good morning.
Speaker Change: Just maybe starting off with the revised guidance can you just maybe walk us through.
Speaker Change: What it is certainly a good Q1, but what new nuclear business do you think you'll be coming into the mix.
Speaker Change: And on that mix question.
Speaker Change: What is it that's going to skew the.
Speaker Change: It's going to skew the margin a little bit lower just so we understand kind of the change in the guidance, yes for sure for sure.
Speaker Change: So slide 12 really says says the picture there.
Speaker Change: Yes.
Speaker Change: And we've what we've got line of sight.
Speaker Change: With the awards that.
Speaker Change: And that we have through to the end of this year and clearly.
Speaker Change: With that line of sight now with.
Speaker Change: The award of Pickering.
And you may have seen that.
Speaker Change: The SME Darlington as well, which came in in Q2, we've got a full line of sight for this year and clearly the guidance for revenue that we had on the table.
Speaker Change: We will exceed and then as we look longer term.
Speaker Change: We know that these projects.
Speaker Change: Many of those life extension projects. So the awards that we have that's in the backlog today is only the first phase or the first phases.
Speaker Change: All of those projects. So we know that the follow on phases come.
Speaker Change: Coming and we also know the scale of those follow on phases. So.
Speaker Change: So when you think about this this slide 12.
Speaker Change: Color coding that we put on that was under contract and on the life extension was under discussion.
Speaker Change: We've got a pretty good handle on what's ahead now what I would say is.
Speaker Change: We're also.
Speaker Change: In discussion.
Speaker Change: No orders.
Speaker Change: No guarantees, but in discussion for new nuclear.
Speaker Change: In Canada and globally.
Speaker Change: Those are not necessarily baked in certainly the guidance that you see this year.
Speaker Change: <unk> baked in for the long the long range guidance. So so we have upside potential.
Speaker Change: When we see new orders, but I'll, just say, there's no guarantee that when negotiating hard.
Speaker Change: On the margin side.
Speaker Change: The zip.
Speaker Change: The guidance that we have out for the long range of 12% to 14%.
Speaker Change: Confidence in.
Speaker Change: In the nuclear business delivering that margin range, which is obviously a superior.
Speaker Change: Margin range, however, the amount of flow through.
Speaker Change: That we have in procurement because of the new wins that we have.
Speaker Change: Pickering and the extension of sort of OTA.
Speaker Change: As men that that's slightly lower lower margin work because you were basically procure them now on behalf of the customers and its flow through so we made the adjustment for this year alone. So the 11.
Speaker Change: 13% for this year, but I expect that to return to normal levels in the future.
Speaker Change: Okay. That's helpful. The.
Speaker Change: The other question I had is on the monarch development. So a couple of pieces of this first can.
Speaker Change: Can you kind of walk us through how the development is actually going.
Speaker Change: We've heard some comments that development should be.
Speaker Change: Sensually complete by 2027, but the other piece of this is also.
Speaker Change: Think about the SMA are happening when you think about monarch.
Speaker Change: Also.
There's a lot there's going to be a lot of burden on the regulators to be able to handle multiple projects. All at once can you talk about.
Speaker Change: Your experience right now with <unk>.
Speaker Change: With regulatory approvals.
Speaker Change: And do you think that thats going to be a bottleneck or is there anything outside.
Speaker Change: You see in terms of being able to move to new construction.
Speaker Change: At the bottom of the decade, that's that's apparent right now.
Speaker Change: Yes for sure so.
Speaker Change: The monarch.
Speaker Change: It's a.
Speaker Change: It's a combination of.
Speaker Change: Parts of the can do technology.
Speaker Change: <unk> been actually regulated approved and built in the past.
Speaker Change: What we're doing with the monarch is almost taking the best of luck.
Speaker Change: <unk> exists today, putting it together with obviously the latest kind of Digitization the latest modulus Asian, the latest safety and bringing bringing all of that to the table.
Speaker Change: A state of the art.
Speaker Change: Reactor design.
Speaker Change: We passed what we call the project definition stage, which was by the first phase of the design development and we pass that and.
Speaker Change: The regulatory involvement.
Speaker Change: With the development of this iterative so it's not like we do all this design and then.
Speaker Change: I'll hand, it over to the regulator and they do that but it's kind of an interesting process.
Speaker Change: And we work on that as we follow through but because the Chengdu technology for the Canadian regulator.
Speaker Change: So obviously familiar with the Canadian regulator, we don't see this particularly as a burden.
Speaker Change: To that regulator.
Speaker Change: And it's going well I mean, we obviously.
Speaker Change: Divestment of our own.
Speaker Change: We welcomed.
Speaker Change: The contribution on loan from the federal government that we announced in Q1 I think that was really good news and a sign of support which was important to us but this is being executed like like a project.
Speaker Change: We are controlling it monitoring the cost monitoring that.
Speaker Change: The progress of time.
Speaker Change: Like we would on a nuclear project.
Speaker Change: Currently we've got.
Speaker Change: Anything between $250 and 350 engineers and scientists working on this.
Speaker Change: To get it across the line as you say for 2027.
We believe we we will be at 2027 across the line regulated ahead of the needs of the customers.
Speaker Change: Customers.
Speaker Change: That we were.
Speaker Change: We will look to serve.
Speaker Change: The reason for that is.
Speaker Change: Because theres always parallel process on a project specific.
Speaker Change: <unk> of permitting environmental assessments all of that so we think we've got a product which is ahead of the needs of customers. We think we've got a great product.
Speaker Change: And we think it's going to be a really essential part of the can do you don't evolution.
Speaker Change: So being a global nuclear counted.
Speaker Change: Kind of company.
Speaker Change: Okay. Thank you I'll leave it there.
Thank you.
Speaker Change: Thank you. Our next question comes from Yuri Lynk with Canaccord Genuity. Your line is open.
Yuri Lynk: Hey, good morning, guys. Thanks for taking my question.
Speaker Change: Morning.
Speaker Change: Just following up on nuclear.
Speaker Change: These are large projects years of years of planning.
Speaker Change: So while I'm happy to see it I am a little surprised at the magnitude of the revenue upside in the quarter.
Speaker Change: So was there anything special or nonrecurring in nature that kind of drove that.
Speaker Change: Am I right and.
Speaker Change: Kind of extrapolating it based on the guidance for the year that Q1 will be the high watermark from a revenue perspective for 2025 correct.
Speaker Change: Yes, I think I think that.
Speaker Change: That's a fair question, because obviously <unk>.
Speaker Change: Revenues are up over 500.
Speaker Change: In Q1.
Speaker Change: And we put our outlook now for the year of $1 92. So.
Speaker Change: Clearly, we're going to be slightly under 500 for the rest of us.
Speaker Change: The year I think.
Speaker Change: Exceptionally.
Speaker Change: <unk>.
Speaker Change: I think that procurement that I spoke to.
Speaker Change: Has been.
Speaker Change: Large component of revenue.
Speaker Change: In Q1, but we're going to see some of that procurement as well it's not like it's.
Speaker Change: Like.
Speaker Change: Double or anything like that or an extra 30%, but it has pushed it to the higher end and then as we work through the year as I said, we've got a high degree of visibility on revenues through to that to that new outlook in 2025.
Speaker Change: And of course.
Speaker Change: As I said in the previous question, we're negotiating both for additional life extensions in Korea additional phases of life extensions in Canada.
Speaker Change: And obviously new build so.
Speaker Change: We believe this sort of I mean, we're going to see revenue growth at 77% every quarter, but we're going to see strong build in the nuclear business.
Speaker Change: Okay.
Speaker Change: Switching to engineering services regions.
Speaker Change: I'm trying to figure out what went on in Canada.
Speaker Change: Your MD&A states.
Speaker Change: <unk> thousand 14% organic contraction in net revenue.
Speaker Change: The math shows net revenue was up 9%.
Speaker Change: Wouldn't think FX would be a big impact could be wrong.
Speaker Change: Or I don't remember any acquisition so.
Speaker Change: Whats the delta there between.
Speaker Change: The 9% in absolute dollars in the organic contraction, let me give you.
Speaker Change: Overview of where we're at and then Jeff could you talk to the specifics in the numbers.
Speaker Change: One of the one.
Speaker Change: One of the dynamics in the Canadian business as well.
Speaker Change: We're dealing with.
Speaker Change: Certainly a H one of 2024 that was very very significant growth and it was significant growth.
Speaker Change: One battery factory, which had quite a high degree of flow through revenue.
Speaker Change: On a year over year comparison.
Speaker Change: That's obviously, what's given us.
Speaker Change: The downside however, if.
Speaker Change: If you look at the the backlog growth, which is strong at 9%.
Speaker Change: And we've obviously looked at the underlying growth without that.
Speaker Change: The one off in that we've actually got good underlying growth in the business is doing it's doing pretty well so.
Speaker Change: We're expecting the Canadian business through the year to do to do well and we're seeing plenty of opportunities.
Speaker Change: Both of the utilities across the country as well as specific projects like Alto that we've won the airport that we won some transit works that we've won so perhaps just Jeff if you can talk to the specifics on the numbers yet, yes, I think the only thing I'd add in there Yuri is that in the first quarter last year, we had an acquisition in our operations and maintenance business.
Speaker Change: Our hospital long term hospital contract here in Montreal, So so.
Speaker Change: That does play into that organic growth calculation, our contraction as well.
Speaker Change: Okay. That's what I was missing okay, I'll turn it over guys. Thank you. Thank you.
Speaker Change: Thank you. Our next question comes from <unk> Yang with Hey, Jordan Your line is open.
Speaker Change: Yes. Thank you very much good morning, everyone.
Speaker Change: Just to come back on the Canada, obviously, you've talked about the major contract ending in Q2 last year, but obviously it looks like that the base is pretty solid but given the.
Speaker Change: The contractual what was likely.
Speaker Change: Would it be fair to expect that conversion for the upcoming quarters and what about the margin improvement for the base. If we work to exclude this particularly contract.
Speaker Change: So youll see Youll see a tough comparison Q2 to some extent and then.
Speaker Change: That dissipates as we move into age too so we're going to see good growth come back.
Speaker Change: As we build towards the end of the year.
Speaker Change: And all of that is that battery factory basically that was canceled out of our backlog.
Speaker Change: Out of our revenues.
Speaker Change: So on the margin side as we said.
Speaker Change: The margin improvement plan.
Speaker Change: Year over year, and we're going to see some fluctuations quarter to quarter as we as we have done here.
Speaker Change: Generally the Canadian business has done well year over year.
Speaker Change: Margins are improving backlog quality.
Speaker Change: Proving.
Speaker Change: The initiatives, we've got in place like more GTC usage.
Speaker Change: Better customers better backlog quality concentration on overhead that they will take effect and you will see.
Speaker Change: Year over year improvement in the Canadian business by by by the time, we get through later in the year.
Speaker Change: Okay, that's great and just moving on the U S and you mentioned some minor delays and disruption. So I'm just curious to know if there is a how.
Speaker Change: How many projects involve and should we expect a reversal or.
Speaker Change: And it flowed through Q2 and beyond.
Speaker Change: So.
Speaker Change: So generally.
Speaker Change: The market as we see it is pretty strong in the U S.
Speaker Change: <unk>.
Speaker Change: One of the issues again, we've been dealing with is actually our minerals and metals contracts, which has given us a year over year.
Speaker Change: A comparison issue, but underlying growth in the U S is pretty good.
Speaker Change: For ourselves.
Speaker Change: There's been a bit of.
Speaker Change: Kind of a department of transport.
Speaker Change: <unk>.
Speaker Change: I wouldn't say volatility I would say more like hesitation, which is now flowing through okay.
Speaker Change: FEMA.
Speaker Change: Is the risk to us we're not seeing too much disruption from the FEMA work right now, but obviously, it's the only federal agency work for so we're keeping an eye on that FEMA apart from that we're seeing pretty good growth, particularly in the transport sector.
Speaker Change: The water sector, we're seeing the funds from.
Speaker Change: From the <unk>, which are about a third dispersed we're seeing that flow through strongly still.
Speaker Change: And I think if there was any.
Speaker Change: Those hesitations and state to state.
Speaker Change: We're seeing we're getting through that now so so we still believe in our own position in the U S and we've got 6000 people now with David Evans. So we're a long way from some of our peers and what we're pretty committed to build the business that to get into the top 10 through London, expanding inorganic and organic growth. So.
Speaker Change: We're feeling pretty good about the U S are now.
Speaker Change: Okay, perfect and just maybe Jeff in terms of capital allocation you've been active on the buyback.
Speaker Change: You're in the <unk>.
Speaker Change: Rossetto integrating Dave Evans, So could you talk about the capital allocation going forward in terms of buy.
Speaker Change: Buyback, how active do you want to be and maybe the timing and pipeline for M&A. If you are capable to undertake.
Speaker Change: More M&A this year and the typical size you would be looking at.
Speaker Change: Yes, sure happy to do that.
Speaker Change: And as you can as you as you know you have referenced we see our ability to deploy capital.
Speaker Change: Both into M&A.
Speaker Change: And in to returns to shareholders with our balance sheet in a strong position now.
Speaker Change: And in fact, I think the first quarter was a good example of that following our Q4 results.
Programmatically.
Speaker Change: Buying back shares, which we think under our <unk> program over the course of the year.
Speaker Change: And with the successful closing of the highway $4 seven which we would continue to expect to happen later here in the second quarter, we would expect to make significant usage.
Speaker Change: Of that NCI program at the same time, we continue to be very active.
Speaker Change: In the pipeline of opportunities for M&A.
With a priority on the U S. But also looking at other white space in other geographies.
Speaker Change: Where we where we see value we would continue to see those acquisitions, though Ben one in line with what we've said tuck in acquisition regional platforms.
Speaker Change: I think David Evans acquisition was a really good example of that.
Speaker Change: Perfect. Thank you very much for the time.
Speaker Change: Kim.
Speaker Change: Thank you again, if you have a question. Please press star one on your Touchtone telephone.
Speaker Change: Our next question comes from Devin Dodge with BMO capital markets. Your line is open.
Speaker Change: Yes, Thanks, good morning, guys good.
Speaker Change: Good morning.
Speaker Change: I'm going to start with.
Speaker Change: Growth in engineering services.
Speaker Change: The guide it.
Speaker Change: It looks like it assumes a pretty material pickup in the second half of the year.
Speaker Change: Just wondering do you feel that you have the contracts in place today that support that acceleration of organic growth.
Speaker Change: And just as a part of that have you received the contracts for the next phase of those giga projects than at least that.
Speaker Change: I'm, assuming accounts for at least a decent portion of that ramp up.
Speaker Change: So.
Speaker Change: We are confident.
Speaker Change: Confidence.
Speaker Change: For a few reasons. So we are seeing good backlog growth I think that's the first thing is saying.
Speaker Change: We are seeing good pipeline development.
Speaker Change: Visibility on the forward kind of workload forward wins and <unk>.
Speaker Change: Bids.
Speaker Change: In front of us so the markets, where we're operating.
Speaker Change: Are holding up really well obviously supported by.
Speaker Change: Government.
Speaker Change: <unk> plans around infrastructure replacement of infrastructure, the energy transition the need for grid expansion et cetera et cetera.
Speaker Change: We are struggling.
Speaker Change: As we said and we kind of highlighted this that in Q1, we've got some year over year issues actually three one is the battery factory in Canada.
Speaker Change: The second was the minerals and metals contract came to an end and 24 in the last within the Middle East, which is a large contract we had.
Speaker Change: Which is the design concept car.
Speaker Change: Contract with phase one closed out.
Speaker Change: At the end of 2004, we were expecting phase III to be awarded and of course again no guarantee but we did the concept design. So we feel we're in a good place for the detailed design, but that's been delayed not canceled it's been delayed we would expect to see that award.
Speaker Change: Later in Q2.
Speaker Change: With revenues coming in later in the year. So when we look at the underlying growth of the business below that we're in a good shape and we're seeing.
Speaker Change: Good growth so as we've modeled that.
Speaker Change: Through the rest of the year.
Speaker Change: We have.
Speaker Change: <unk> reaffirmed through ourselves.
Speaker Change: Our outlook range that we've got seven to nine is more than achievable. So obviously, that's why we didn't make any adjustments to that as we worked through so so confident we're going to see this come back some extent in Q2, but mainly as we get into <unk>.
Speaker Change: Okay. Good color. Thanks for that and then the second question.
Speaker Change: On the East Harbor Transit hub project I was wondering if you could speak to the role that Atkins.
Speaker Change: On that project and how we should think about how the risk is shared between.
Speaker Change: The client and the project developers, but also going to get a sense for how the risks and financial contributions for the project are distributed amongst the partners in the JV.
Speaker Change: Yeah. So as you know we don't do.
Speaker Change: Elyse Teekay work anymore, we exited that in 2019.
Speaker Change: What we what we do is we obviously work and the design and the project management space and large transit projects and we can go beyond that if it's what we would call a subcontract like a target cost contract where the risk profile.
Speaker Change: As our risk profile, where we count incurred a significant loss because the downside is capped by that target cost arrangement. So the east Harbor was a was a contract that.
Speaker Change: We won a couple of years ago actually.
Speaker Change: There is a development phase of that contract that we've been working through.
Speaker Change: Which accumulates in the agreement of this target cost and a joint venture with a construction company.
Speaker Change: And.
Speaker Change: We've converted that.
Speaker Change: <unk>.
Speaker Change: We now announced that converted.
Speaker Change: For Metro links so.
Speaker Change: Not a construction per se contract.
Speaker Change: Okay got it thank you.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you. Our next question comes from Michael to pump with TD Cowen Your line is open.
Michael: Yes. Thank you good morning.
Speaker Change: Okay.
Speaker Change: I'm wondering I know you've asked a few questions about this but wondering if you can speak a little bit more about the expected organic revenue growth progression in engineering services as you move through the year.
Speaker Change: So obviously you had a modest organic revenue contraction in the first quarter, but maintained the 70% to 90% for the full year.
Speaker Change: I know you've touched on Canada, a little bit already but I guess im wondering any comments around how you see.
Speaker Change: All of the regions of the other regions performing relative to that 79% are some likely to be ahead of it and others potentially below I didn't get you in that range or should we be thinking about them, all sort of being more or less within that range.
Speaker Change: So yes.
Speaker Change: I have a quick cancer through the four regions perhaps.
Speaker Change: Obviously, we spoke to Canada.
Speaker Change: Seeing.
Speaker Change: Pretty good opportunities across Canada.
Speaker Change: As we said in confident once we get past this year over year comparison were going to see that coming back in <unk> to the U S.
Speaker Change: Regardless of all of the kind of.
Speaker Change: Noise around the U S macroeconomic.
Speaker Change: We're confident in our own business.
Speaker Change: Clearly excited with David Evans joining us.
Speaker Change: To exploit some of those revenue synergies that we see there on the west coast and start picking up.
Speaker Change: Worked through and with David Evans on the West Coast.
Speaker Change: Backlog.
Speaker Change: Grew 6% in Q1, which is a forward looking indicator for the year. So again.
Speaker Change: You heard me kind of talk through through the U S.
Speaker Change: The fact that the IHA is still flowing through the states.
Speaker Change: And we're seeing a positive market, but perhaps let's move to the U K and EMEA, where we.
Speaker Change: We've not talked about so far.
Speaker Change: Lot's happened in the U K in Q1.
Speaker Change: In terms of announcements.
Speaker Change: Our business is well positioned and you would say that perhaps towards the end of last year.
Speaker Change: The start of this year.
Speaker Change: The sector the industry was.
Speaker Change: With suffering from the changeover of government as they've got their plans together and gotten their announcements together, but we still grew 3%.
Speaker Change: And good backlog growth as well, but what we've seen.
Speaker Change: In Q1, and then I was actually there was an announcement by the Chancellor is is the 10 year infrastructure plan coming together of the 100 billion pounds spend.
Speaker Change: Our commitment to spend to get to 5% of GDP on defense and nuclear expansion program.
Speaker Change: Slated as the biggest nuclear expansion program in the country for 70 years and then the next cycle of water investment.
Speaker Change: Eight water.
Speaker Change: Cycle investment and large programs and this is really important there was east West rail we did the first phase of that they've announced that they're going to move ahead with the second phase.
Speaker Change: Heath rope.
Speaker Change: Third runway, we've been heavily involved with that last time before it was canceled that's that's been announced to come back <unk>.
Speaker Change: <unk> crossing which is this big tunnel in road to bypass London. We've already won that and then it was put on hold and that's announced it's going ahead, and then development of the north of England into northern powerhouses.
Speaker Change: So we expect a good position for our business. There is we've got a whole full service business and.
Speaker Change: Pretty excited by the prospects.
Speaker Change: In EMEA.
Speaker Change: Maybe start with the Middle East obviously.
Speaker Change: No not having the release of the second phase of this large rehab project has had an effect on those and I don't see the middle East business.
Speaker Change: It's kind of where we want it to be the middle East business, we're not pushing to grow it further than where it is 10% to 12% of our business.
Speaker Change: But the market will sustain our business at this level.
Speaker Change: And we're seeing actually the opportunities coming out of the UAE in terms of development of new buildings.
Speaker Change: Investment back into rail.
Speaker Change: As the UAE expands but also the projects that we've attached ourselves in Saudi.
Speaker Change: These projects, which really need to get done for <unk> 30, and <unk> 34. So I think our plan. There is a good one and I think we can maintain that level of revenue that we've got now, but where we really want to see our growth in our EMEA region.
Speaker Change: That we're focused on right now is in Asia and Australia.
Speaker Change: We're very very small in both we are seeing good.
Speaker Change: Business coming back in Hong Kong as Theyre investing into this new city, which is called the northern Metropolis. So in industrial work coming through in Asia and importantly.
Speaker Change: Energy and defense opportunities in Australia, So so for our EMEA region.
Speaker Change: Thats, where were looking and Thats, where we are focusing our efforts for growth with us.
Speaker Change: With a reasonably flat.
Speaker Change: So I think that probably covers all of the four regions I hope that's helpful.
Speaker Change: Yes definitely.
Speaker Change: Well thank you.
Speaker Change: Second question is just about your expectations for engineering services region's adjusted EBITDA margin for the year. So obviously no changes to your guidance there is still calling for 16% to 17%.
Speaker Change: <unk> range.
Speaker Change: Again talked about Canada, a little bit earlier in the call I just I'm just wondering though the fact that on an overall basis ESR as EBITDA margin was down 20 basis points in the first quarter.
Speaker Change: Year over year is it still reasonable to think about the midpoint of that that overall margin range of 16% to 17% at the midpoint still potentially achievable at this point or does the Q1 decline we should be focusing more on something below the midpoint for the full year.
Speaker Change: No I think pointing to the mid point of that of that range is a good place to be Michael and what we saw in the first quarter was in line with our expectations. So.
Speaker Change: Continue to be very comfortable with the range, we put out there.
Speaker Change: Now program a program is its a year over year kind of program.
Speaker Change: And obviously the.
Speaker Change: The intent and the margin expansion program that we've got is to get to superior margins over a period of time and.
Speaker Change: As we've said before there's a number of.
Speaker Change: Specific actions that are being undertaken to.
Speaker Change: To build that margin enhancement over time, the GTC, the overhead control development pipeline utilization and AI and technology.
Speaker Change: Bringing all these things in.
Speaker Change: To lower our cost and improve our profitability.
Speaker Change: Political program that we're monitoring very very closely through a range of kpis. So so we are confident.
Speaker Change: And our destination.
Speaker Change: Alright, I will leave it there thank you.
Speaker Change: Thank you. Our next question comes from Maxim <unk> with MBS. Your line is open.
Maxim: Hi, good morning, gentlemen.
Speaker Change: <unk>.
Speaker Change: Is it possible to get a sense of our sellers' expectations right now.
Speaker Change: Jeff.
Speaker Change: Given sort of all the uncertainty if there is some opportunity from that perspective or are people still kind of sticking to that comes in terms of multiples.
Speaker Change: It sounds like Max Youre talking from an M&A perspective is that fair correct. Yes, yes. At this point I don't think we've seen any material movement in sellers' expectations I think to your point.
Speaker Change: It often takes a longer time period, but.
Speaker Change: But as we've talked about before.
Speaker Change: For the sorts of acquisitions, we're looking at and in the areas. We're looking.
Speaker Change: We think there is.
Speaker Change: Reasonable price expectations.
Speaker Change: Generally for the for high quality firms.
Speaker Change: Who want to join and be associated with that with a strategic player and that's not always true for everyone and that's fine.
Speaker Change: But there is there is a big enough pipeline of opportunity, we're seeing for firms that lineup strategically culturally.
Speaker Change: With us with type of capability that we're looking to continue to grow with that.
Speaker Change: That we think we can transact at.
Speaker Change: And accretive to shareholder value type model, so not seeing any changes.
Speaker Change: Just to build on that I mean.
Speaker Change: Obviously price is important and obviously the price is going to be in the right range, but very often it's the value proposition that we bring as atkins or Alice.
Speaker Change: Can convert these acquisitions across the line, our culture and our ability to add global capability.
Speaker Change: And global reach into larger projects to help companies of that scale grow.
Speaker Change: That's where we're seeing ourselves getting differentiate it.
Speaker Change: Okay makes sense and then just quickly in terms of.
Speaker Change: In the past, we discussed the defense capabilities of asking cialis.
Speaker Change: Given what's happening sort of on the broader geopolitical world in the UK, Australia, and Canada also pushing for.
Speaker Change: Great.
Speaker Change: Hence commitments do you mind, just providing a little bit of an overview, where youre exposure resides and how much gross vertical this could become over time, yes, yes. So the way I would describe this is that we would you ever seen in defense that doesn't move so if you've got the specific defense <unk>.
Speaker Change: Factors that bill submarines, our aircraft those ships.
Speaker Change: <unk> for.
Speaker Change: The lifecycle of those assets, 70% of it is actually in enabling maintenance operation storage.
Speaker Change: Construction of <unk>.
Speaker Change: Infrastructure, So we stay primarily in the infrastructure space.
Speaker Change: We would either partner with the Oems.
Speaker Change: Yeah.
Speaker Change: Developing those assets or with the government to support the development of those assets. So we've been doing this in the UK for a very very long time from the original Atkins business and submarines aircrafts chips in.
Speaker Change: <unk> and <unk>.
Speaker Change: In land based.
Speaker Change: Programs, So what would try what we are doing now.
Speaker Change: And specifically on a couple of programs in Australia, we're already involved in the UK Orcas program, which is the nuclear submarine program with selling.
Speaker Change: Selling our expertise in Australia has been involved with that program, but in the in Canada, right now, which is obviously seeing a really new and refreshed approach towards defense spending we are using the all the experience that we've got from the UK to explain how procurement has been done.
Speaker Change: How the successes and kind of lessons learned.
Speaker Change: <unk> carried out so so we're pretty optimistic that as you said, particularly on Canada, and Australia, where our defense businesses is virtually zero today.
Speaker Change: But we hope to build on the back the U S is more difficult for us.
Speaker Change: It's not a particularly strong target market for us right now.
Speaker Change: Just because of.
Speaker Change: The U S content.
Speaker Change: The need to kind of be a U S company to do that.
Speaker Change: Alright, Thanks, guys. Thank you so much for us.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Ian Gillies with Stifel. Your line is open.
Ian Gillies: Good morning, everyone.
Speaker Change: Good morning, good morning.
Speaker Change: I was I wanted to inquire a little bit I mean, we've seen some initial announcements, although not formal around capital spend in Saudi Arabia as it pertains to data centers and joint investment with the U S. Could you maybe provide a bit of an overview of how you think your business in that region could stand to benefit if this becomes a real spend.
Speaker Change: Yeah, I mean, what where we are right now.
Speaker Change: Yeah.
Speaker Change: Actually been.
Speaker Change: Quite successful.
Speaker Change: Is on MAGE.
Speaker Change: Transformational programs our column.
Speaker Change: To reach what was originally the vision 2030 and now.
Speaker Change: Vision beyond and Thats projects like <unk> like King Solomon Park, and re out like the Newmar Alba project in rehab and these projects are tens and tens of billions of dollars of programs.
Speaker Change: And Youll see and read.
Speaker Change: Press that the budget has been co but.
Speaker Change: It's been cut into tens of billions.
Speaker Change: It's still a very very significant program for us with a lot of opportunity in it.
Speaker Change: So that's where we are right now.
Speaker Change: As for.
Speaker Change: This renewed kind of U S, Saudi investment and potential I mean, clearly if.
Speaker Change: If that does transpire in technology in data centers and the like.
Speaker Change: That could present.
Speaker Change: Further opportunity as far as but as but as I said, we're pretty comfortable with the level of business, we've got that now and that.
Speaker Change: A key.
Key kind of.
Speaker Change: Strategy right now there is to maintain the level of revenues that we've got not continue to significantly grow and.
Speaker Change: Perhaps get over exposed to the middle East.
Speaker Change: That's that's very helpful. Thank you.
Thank you.
Speaker Change: As a quick follow up I know, we're getting close to time, but the.
Speaker Change: The balance sheet, obviously in very good shape.
Speaker Change: You have been using the <unk>.
Speaker Change: You've stated your M&A policy has there been any discussion or any thoughts towards the use of it.
Speaker Change: Statute issuer bid at any point, given what I would call the perceived value of the stock being quite an expensive today.
Okay.
Speaker Change: Yes.
Speaker Change: When we looked at our sort of share buyback program. We've looked at all sorts of options available to us we think.
Speaker Change: What's available to us under the <unk> program.
Speaker Change: Is.
Speaker Change: Is sufficient in terms of what we're looking to do obviously, we will continue to keep that under review, but as you've seen we've already.
Speaker Change: Significantly increase the rate at which we're buying back shares versus previous years and that's.
Speaker Change: Both in anticipation of the.
Speaker Change: The closing of the 407.
<unk> and therefore beyond that.
Speaker Change: You would expect that to continue as well, but I think at this point, we're comfortable with the NCI program. We have it's a pretty substantial amount of share buyback that we're able to do under that program. This year.
Speaker Change: Understood. Thanks, very much Tim.
Speaker Change: Thanks.
Speaker Change: Thank you. Our next question comes from Jonathan Goldman with Scotiabank. Your line is open.
Jonathan Goldman: Hi, good morning team and thanks for taking my questions.
Jonathan Goldman: Most of them have been asked already but just a couple on David Athens could you elaborate on some of the revenue synergy opportunities for that business and I know, it's early days, but when do you think or might expect to start seeing those initiatives flow through organic numbers.
Jonathan Goldman: Yeah, I mean as you can imagine.
Jonathan Goldman: Through all of.
Jonathan Goldman: The due diligence process in the <unk>.
Speaker Change: Those in process, we've been keen to explore with David Evans.
Jonathan Goldman: The possible is.
Jonathan Goldman: And there are numerous.
Jonathan Goldman: Projects.
Jonathan Goldman: And perhaps rather than go into the.
Jonathan Goldman: The specifics of each of those projects just talk about the strategy in concept.
Jonathan Goldman: That accompanies such as David Evans would be.
Jonathan Goldman: Reasonably limited in scale to a certain size of project and they they are a great business with great relationships.
Jonathan Goldman: That operate for the departments that transports on the west coast and to some extent.
Jonathan Goldman: Design contracts for.
Jonathan Goldman: Builders constructors.
Jonathan Goldman: What we can bring.
Jonathan Goldman: Obviously, a lot more scale and a lot more.
Jonathan Goldman: Strengths.
Jonathan Goldman: To move up to larger projects certainly on the on the design side. So so that's.
Jonathan Goldman: That's a revenue synergy that doesn't exist for us because we haven't got a presence on the west coast. It doesn't exist for David Evans, because they can't get to that scale.
Jonathan Goldman: I think in.
Jonathan Goldman: In addition to that.
Jonathan Goldman: There is a strict capability issue.
David: David It was traditionally.
Speaker Change: <unk> been in specific areas of the business and transport to some extent in industrial but what we can bring us specific subject matter expertise on things like rail systems.
David: Aviation.
David: Or.
David: Industrial water.
David: I just haven't got so again using the.
David: The relationships using that presence and using the mass of engineers. If you like we can put we call. It one plus one equals three together.
To generate that so so we've developed a list of pipeline list.
David: Projects that we will work on together.
David: Well, we're only the.
David: 70% holder of this and we'll work and bid on those together.
David: We'll win those together and then obviously over time, we moved to full integration.
David: Interesting thats, good color and maybe just a housekeeping one.
Speaker Change: Jeff do you have an update on the timing of the closing of the remaining tranches of the <unk> seven.
Speaker Change: No. We don't we don't at this point so focused on.
Speaker Change: Getting the transaction.
Speaker Change: First part of the transaction closed here in the in the second quarter.
Speaker Change: We'll have to we'll have to see beyond there I don't have I don't have that going beyond there in terms of.
Speaker Change: Whether the Counterparties and when they would want to exercise their.
Speaker Change: There are options.
Speaker Change: Okay fair enough. Thanks for taking my questions. Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: Im not showing any further questions I would now like to turn it back to Denys Jasmine for any further remarks.
Speaker Change: Thank you very much everyone.
Speaker Change: Your question please.
Speaker Change: Contact me directly.
Speaker Change: Good day and fitness Billy Thank you very much for joining us.
Speaker Change: Thank you.
Speaker Change: Thank you for participating in today's conference. This concludes today's program you may all disconnect.
Speaker Change: Everyone have a great day.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].