AtkinsRéalis Group Inc.

Thank you for standing by, and welcome to the Atkins-Realis Second Quarter 2025 Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now... I'd like to, as a reminder, today's program is being recorded, and now I'd like to introduce your host for today's program, Dennis Jasmine, Vice President, Best Relations. Please go ahead, sir.

Thank you, Jonathan. Bonjour tout le monde. Good morning, everyone, and thank you for joining us today. For those joining in, we invite you to view a slide presentation that we have posted in the Investors section of our website, which we will refer to during this call. Today's call is also webcast. With me today are Ian Edwards, Chief Executive Officer, and Jeff Bell, Chief Financial Officer. Before we begin, I would like to ask everyone to limit themselves to one or two questions to ensure that all analysts have an opportunity to participate. You are welcome to return to the queue for any follow-up questions. 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 uncertainty, and as such, Actual results may differ materially from the views expressed today. For further information on these assumptions, risks, and uncertainties, please consult the companies relevant to filing on SIDAR+. These documents are also available on our website. Also during the call, we may refer to certain non-RFRS financial measures. Reconciliation of these amounts to the corresponding RFRS financial measures are reflected in our earnings release and in DNA, which can be found on SIDAR+, and our website. And now I'll pass it over to Ian Edwards. Ian?

Thank you, Denis. Good morning, everyone, and thanks for joining us today. I'm going to begin today's call by providing an overview of our performance in the second quarter, our record backlog, and the current success and opportunities we're seeing across our engineering services regions and our nuclear businesses. I'll then pass it to Jeff to provide more detail on our financial results, our 2025 outlook, and our capital allocation activities we executed in Q2. And then we'll open it up for Q&A. So let's get started on slide three. We had another strong quarter with solid revenue growth. Atkins Realis services revenue grew 15% to $2.6 billion with strong increases in the engineering services regions, nuclear and links-on. Engineering services regions revenue organically declined 1% to $1.9 billion, while nuclear revenue organically grew 56% to a quarterly record high of $567 million. LinkedIn revenue organically grew 11%. We also had a strong increase in adjusted EPS from PS and PM and adjusted EBITDA from PS and PM. with Atkins Realis services segment adjusted EBIT increasing 21% to $246 million. Our total backlog reached a record high of $21 billion this quarter as our expertise across engineering services and nuclear continues to be in demand. Continued growth and record high backlog in our nuclear business is leading us to increase our revenue outlook for 2025. On the other hand, due to lower year-to-date revenue growth in the USLA and EMEA segments, we are decreasing our 2025 Engineering Services Region's revenue organic growth outlook. We expect the four-year impact on profitability of all these changes to be neutral. Jeff will provide more details on this later in the call. During the quarter, we closed on the acquisition of a majority stake in David Evans and completed the sale of our interest in Highway 407. This resulted in total proceeds of approximately $2.6 billion. We also paid down our debt by $900 million and repurchased 9 million shares. These moves have further strengthened our balance sheet and put us temporarily in the rare position of being net cash positive. We are now distinctly positioned to act on opportunities that arise, including further growth through organic and inorganic investments. At our investor day in June of last year, we outlined a disciplined capital allocation framework, which consisted of maintaining a strong balance sheet, investing in the business, and returning capital to shareholders. Since that time, we have taken considered actions across each of these priorities in line with what we said. We now have an industry-leading balance sheet following the repayment of a significant part of our debt. That priority is completed. We also have bought back a significant number of shares year-to-date, returning approximately $800 million to shareholders. While our NCIB program remains active, going forward, we would expect our share repurchases to be much smaller. The remaining capital allocation priority under our delivering excellence and driving growth strategy is investing in the business. Will be our focus going forward. As we have said previously, we will look to invest to build out the white space of the company in our chosen geographies and end markets, organically and inorganically. Organically, we will continue to invest in our engineering services regions and our nuclear development, as we see very strong future for our nuclear services across the globe. Inorganically, our David Evans transaction is a great example of our disciplined approach to executing our land and expand strategy in the US. And we have a strong pipeline of opportunities to continue to do so. In addition, we see opportunities to purchase businesses in our other engineering services regions to address gaps in strategic high growth end markets like transport, water, defence, buildings and power, and improve our geographic density. M&A is an area that consumes a meaningful amount of my personal leadership effort. On slide five, you can see the continued progression of our backlog growth across Atkins Realis services. The 33% increase over the prior year was driven primarily by the demand in our nuclear expertise. In Canada, we were awarded a $450 million contract extension for the first of four planned small modular reactor units. in Darlington. We also have been selected as the technical and project management delivery partner for phase one of the Calgary Green Line. In UK, our prior successes at London Heathrow Airport has led to additional awards this quarter in support of preventative systems maintenance at their main tunnel. And in the US, we are building a leading position supporting transportation development in Florida. We were awarded a design and development contract for Florida's 500-mile tunnel network. And in Asia, we secured a contract to redesign the design of the Hong Kong section of the Hong Kong Shenzhen Western Rail Link, further expanding our foothold in the growing Asia market. Turn to slide six, revenue in our engineering services regions business. increased by 6% year over year. Excluding revenues from David Evans and the impact of FX, revenue organically declined slightly. This decrease was expected as we faced difficult year over year comparisons following a strong performance in Q2 2024. And as we have discussed, we have also experienced delays or termination of a handful of major projects which impacted the first half of the year. These projects should roll off in the second half of the year. And excluding these projects, the underlying organic revenue growth in the first half was actually in line with our target of 7% to 9%. Due to the impact of these projects and lower expected revenue growth in the US, LA, and EMEA segments, we now expect that revenues for engineering services regions should organically grow in 2025 over 2024 by mid-single-digit percentage. Segment-adjusted EBITDA over net revenue margin was nearly 16% for the second quarter, up 50 basis points versus the prior year period. And notably, we continue to increase our backlog, which now stands at $13 billion, representing a 6% increase versus our backlog as of June 30, Beginning on slide seven, we provide an overview of each of our four regions and their performance this quarter. In Canada, revenue organically declined 1%, but segment-adjusted EBITDA grew to $33 million with a 15% margin, as our operating margin improvement efforts delivered a 430 basis point year-on-year increase. Backlog increased 5% year-over-year. and now stands at just below $8 billion. A major project in Q2 2024 leading to difficult year-over-year revenue comparison. That said, our relative flat revenue performance coupled with our increased backlog highlights the continued growing demand for our unique end-to-end capabilities across the power and renewables and transportation markets. We remain very bullish on our engineering service prospects in Canada as the Building Canada Act is leading to increased opportunities across many markets where we work. We're also committed to enhancing margins, and the results this quarter highlighted the success of the work in this business. We have successfully implemented initiatives to improve pricing, productivity, and overhead, as well as serving our clients more effectively through our global technology centre. In UK and Ireland, Revenue grew 11% and organically grew 5% year over year, primarily by strong demand in water and infrastructure markets and new investment programs in aviation and rail signaling, as well as in the defense market. Segment adjusted EBITDA grew $92 million in the quarter, representing a 17% EBITDA margin, 40 basis points better than last year. as the business continues to focus on efficient project delivery. Backlog grew 30% year-on-year to approximately $1.9 billion driven by winds in water, aviation and infrastructure. In the UK government recently announced plans to increase defence spending to 2.5% of GDP by 2027. the government's 10-year infrastructure strategy, commits to over $1.3 trillion in infrastructure investment over the next decade, spanning our key sectors of water, energy, aviation, and rail. Turning to slide nine, our U.S. land and expansion strategy continues to make strides. We closed on the acquisition of the majority stake of David Evans, achieved a record backlog in Q2, and our prospects pipeline remained strong. During the second quarter, revenue increased by 18%, but excluding David Evans' acquisition and FX, revenues organically declined 3% year over year. Strong growth in our U.S. engineering services and transportation infrastructure and industrial markets was offset by a decrease in our global minerals and mining sector. segment adjusted EBITDA was $54 million and a 13.7% operating margin, an improvement of 60 basis points over the previous year. The backlog increased 17% year-over-year to nearly $1.8 billion as we continue to prioritize client engagement and leverage our unique end-to-end capabilities. We continue build our backlog in the US, winning work with the Department of Transportation and Infrastructure Solutions. Early collaboration with David Evans' team is progressing as planned and has already resulted in winning work together in the US Northwestern. As we continue our land and expand strategy, we look to strengthen our foothold in growing end markets and regions across the country. And while uncertainties around tariff negotiations continue, it's important to emphasise that we've not been directly affected by these measures. That said, we are closely monitoring potential effects on the broader US economy, and we've seen some delays in infrastructure project wins converting to revenue. Regardless of the near-term market uncertainty, our conviction in the long-term growth of our end markets remains strong. we are strategically positioned to capitalize on many opportunities, leveraging our robust balance sheet and increasing cash flow to demand our footprint, expand our footprint, and drive sustained value creation. In EMEA, revenue declined 8% and 9% on an organic basis. Segment interest in EBITDA declined to $31 million, representing a 16% margin over net revenue. down just over 3% from a year ago to the business mix of projects. Total backlog in EMEA was approximately $1.3 billion, down 4% versus the second quarter for 2024. And declines in revenue and backlog is mainly due to lower volume on buildings and places projects and the completion of a large project in the Middle East at the end of last year. Specifically in Saudi Arabia, Budget reprioritizations on large-scale programs are taking place, leading to some award delays and completion of major projects. However, the long-term health remains strong. And while we are pleased with the current size of our Middle East business, we expect to continue to grow the EMEA region through a disciplined revenue growth strategy in Asia and Australia. In Asia, backlog has continued to grow as we have seen sustained investments in infrastructure and transportation. In Australia, we are focused on expanding our presence through opportunities that leverages our global expertise, such as defence, power and infrastructure. We are confident in the sizeable opportunity that Asia and Australia markets represent over the long term. I'd now like to move to slide 11, and the results of our nuclear business. We continue to demonstrate significant growth, achieving an organic revenue increase of 56% compared to the second quarter of 2024. Our nuclear backlog is now $5.6 billion, 223% higher than our backlog as of June 30, 2024. which continues to primarily grow through life extension bookings in the CanDo fleet in Canada, Europe, and Asia. Segment-adjusted EBIT grew 47% to $64 million in the second quarter, and segment-adjusted EBIT margin was approximately 11%. Segment-adjusted EBITDA grew 42% year-over-year, and the margin now stands at 25%. On slide 12, we highlight the achievements across our nuclear CANDU and services portfolios. In our CANDU business, Canadians for CANDU continues to gain support and we're actively engaging in bidding discussions for several large new nuclear projects in Canada and abroad. In Europe, we entered into an agreement with EDF, one of the world's leading electricity production and distribution companies. This is an important agreement for our nuclear business, bringing opportunities to share capability and expertise in support of both our organisations, taking advantage of the renewed global interest in nuclear power. In our services business, as I noted earlier, we were awarded the contract for the first of four SMRs in Ontario. a continuing nuclear support at Hinkley Point C and Sizewell C, as well as decommissioning services at Sellafield in the UK. Additionally, we continue to expand our nuclear capabilities in the US, as the Department of Energy provided our joint venture the notice to proceed for the operational maintenance of the Portsmouth and Paducah gaseous diffusion plants. And lastly, Atkins Rail is is part of a new pioneering partnership with the Nuclear Decommissioning Authority in the UK, which will see innovative technology deployed for the first time on a nuclear site to remotely and autonomously sort and segregate radioactive waste. This is an important step to operate more safely and more efficiently on the site. Our year-to-date nuclear performance and backlog, record high levels provide a strong foundation As such, we are raising once again this quarter our full year revenue outlook to a range of $2 billion to $2.1 billion. Turning to slide 13, a reminder that we are capturing near-term and long-term can-do revenue opportunities within our nuclear business. The potential contracts you see on this slide showcase a massive opportunity for Atkin to realise and could deliver significant growth for the foreseeable future. These represent profitable contracts and highlight our real backlog and our growing teams who deliver real projects every day. Our greater than $5 billion nuclear backlog achievement is just the start as our customers are continuing to recognise our nuclear expertise. we've been working hard to bolster our backlog with high-quality wins. Total backlog does not include follow-on stages for our recent wins and a very small amount of can-do news. We cannot overstate the significant opportunity in front of Atkins Realis in the nuclear sector. Now I'm moving to slide 14, and I'll link some LSTK projects in capital businesses. In our LinkedIn segment, revenue organically grew 11% year over year. LinkedIn realized a 360 basis point of EBIT margin expansion in the second quarter as operational improvements continue to positively flow through the business. Backlog increased 28% to $2.1 billion at the end of the quarter. We are seeing backlog improvement across the Americas, Europe, and the Middle East. On our SICA project, segment-adjusted EBIT was in line with expectations. Commissioning and testing on the Ontario Eglinton project is progressing well, and the backlog decreased 40% year-over-year at the end of the second quarter as work continues to progress on the REN project. On capital, we completed the sale of our interest in IRA 407 and received our last dividend of $13.5 million in April. Other assets continue to perform well. I'll now turn it over to Jeff to discuss our financial results and 2025 outlook.