AtkinsRéalis Group Inc.

Good day and thank you for standing by. Welcome to the Atkins REL's third quarter 2025 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'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today. Dennis Jasmine, please go ahead.

Thank you, Kevin. Good morning, everyone, and thank you for joining us today. For those that are in, we invite you to view the 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're 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 uncertainties, 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 company's relevant filings on CDAR+. 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 the MD&A, which can be found on CEDAW Plus and our website. And now I'll pass the call over to Yann Arouz. Yann?

Thank you, Denis. Good morning, everyone, and thank you for joining us today. I'm going to begin today's call by providing an overview of our company performance in the third quarter, including our record backlog and margin, as well as performance highlights across the engineering services regions and nuclear businesses. I'll then pass it back to Jeff to provide more detail on our financial results and our updated 2025 outlook before we open it up for questions. Let's get started on slide three. Our third quarter performance highlights our ability to both grow and operate more efficiently across the business. We delivered another strong quarter of services revenue growth, up 17% year over year, or 11% on an organic basis. Engineering services regions revenue reached a record high of $1.9 billion, while nuclear revenue organically grew 60% to a quarterly record high of $596 million. Lynxon continues to perform well and organically grew 15%. We also had a strong increase in adjusted EBITDA from PS and PM of 21%, a record high adjusted EBITDA from PS and PM margin of 10%, highlighting the work that we have done across the business to improve margins. Our total backlog reached a new record high this quarter, as our expertise across engineering services and nuclear continues to be in demand. Atkins Realis Services' backlog recorded a 24% growth versus the backlog as of September 30, 2024. The continued revenue growth and increasing backlog in our nuclear business has led us to increase our nuclear revenue output to $2.2 to $2.3 billion for 2025. On the other hand, due to lower year-to-date revenue growth in our USLA and EMEA regions, we've decreased our 2025 organic revenue growth outlook in our engineering services regions business to a low single-digit year-over-year percentage increase. We expect the full-year impact of these changes on profitability to be neutral. Jeff will provide more details of this later. Subsequent to quarter close, we announced the acquisition of C2AE, which advances our land and expand strategy in the US, and is in line with our stated capital allocation priorities. Our pipeline of potential bolt-on acquisitions remains robust, and we would expect to announce further acquisitions in the coming quarters. We're extremely proud of our accomplishments this quarter, generating record revenues, backlog, and margins, while utilizing strong operating cash flow to invest in M&A opportunities to expand our footprint in geographical white spaces. Our delivering excellence, driving growth strategy is creating value for shareholders. Turn into slide four. Revenue in our engineering services regions business increased 8% year over year. But if we exclude David Evans, revenues and positive FX impacts, organic revenue was basically flat. Segment-adjusted EBITDA over net revenue margin was 17% for the third quarter, up 30 basis points versus the prior year period, as operating margin improvement initiatives are bearing fruit. specifically through optimized cost, enhanced bidding discipline, artificial intelligence, and continued leveraging of digital tools for more efficient project delivery. Notably, we continue to increase our backlog, which now stands at a new record high of $13 billion, representing an 8% increase versus our backlog as at September 30, 2024. Beginning on slide five, we provide an overview of each of our four regions and their performance this quarter. In Canada, revenue organically grew 1%, while segment-adjusted EBITDA grew $36 million with a 17% margin, 180 basis points increase, highlighting our continued efforts on our margin improvement plan. Backlog grew 5% year-over-year and now stands at $7.8 billion. Given market dynamics, we are focusing on growing our presence in the buildings and places, transportation, industrials, power renewables, and defence end markets, as we believe these areas offer good opportunities in the near future. We saw growth this quarter in transportation and power renewables, while softness in the industrials end markets remain. Separately, recent NATO commitments by the Canadian government are likely to yield further opportunities for our defence expertise. And looking at the opportunities that will come from building Canada Act are set to have a positive impact on Actings Realis. The government's focus on accelerating domestic funding for large-scale projects is exciting and due to our well-established foothold in the market. And our historical success across the entire infrastructure lifecycle we remain bullish about the near-term opportunities that may present themselves from this bill. In UK and Ireland, revenue grew 10% and organically grew 5% year over year, primarily driven by strong demand in aviation, water and defence. Segment-adjusted EBITDA grew $102 million in the quarter, representing an 18.6% EBITDA margin as the business continues to improve the efficiency of project delivery. Our concentration and flexibility in the region enable us to consistently position our people in areas with the highest demand, which helps underpin strong operating margin delivery. Backlog grew 15% year on year to approximately $1.9 billion, driven mainly by wins in the defense and transportation markets. Our expertise in water is creating significant opportunities with the AMP8 investment programme, as evidenced by a recent win with the Anglia Water Services, representing a more than $1.5 billion opportunity over the next 15 years. As mentioned on prior calls, there have been several commitments by the UK government to increase funding for defence and infrastructure spending over the next decade. in power and renewables is rising with early-stage activity in grid investments, while the established long-term UK industrial investment strategy will yield enhanced opportunities in the industrials end market. We have a strong and growing presence in UK and Ireland, and we are focused in our efforts on enhancing our capabilities across the transportation, defence, buildings and places, water, power and renewables and industrial end market. as they present the most opportunity over the next several years. Turning to slide seven, our U.S. land and expand strategy continues to make strides, and we recently announced the acquisition of C2AE, which strengthens our presence in the upper Midwest and expands capabilities in key growth and markets such as water. During the third quarter, revenue increased 36%. However, excluding David Evans' acquisition and favorable FX impacts, organic revenue was flat year over year. A softness within our global minerals and metals sector weighed on the results. If we exclude that, if we exclude our global minerals and metals business, our underlying engineering services business in the U.S. organically grew about 4%. We experienced slower framework agreement conversion to projects and procurement disruptions, which were primary growth detractors in the quarter. But that being said, we believe these headwinds are temporary, and we remain confident in the near-term and long-term growth opportunities in the US for our services. Segment-adjusted EBITDA was $66 million, which translates to a 15.8% operating margin an improvement of 30 basis points on the previous year. Margin improvement was driven by sustained project execution and overhead control. The backlog increased 11% 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 to build our backlog in the US particularly with the departments of transportation. We have continued to deepen our collaboration with David Evans' team to win incremental new work, which the pipeline of opportunities continues to increase. Financially and operationally, the business is performing in line or ahead of our expectations. While we are not directly affected by the recent U.S. government shut down federal funding to state's slope, impacting some of our clients at state level. As a result, we're experiencing some delays in receiving contract awards and commencing projects. In the meantime, our pipeline is growing, and we are actively investing organically and inorganically to expand our position in the marketplace. And regardless of the macro dynamics, our conviction in the long-term growth of our usla business in end markets remain strong we are strategically positioning ourselves to win new business in the transportation buildings and places industrials minerals and metals and water and markets given the near opportunities we see in emir revenue declined nine percent while segment adjusted decline to 34 million dollars representing a 16% EBITDA margin over net revenue. Revenue declined primarily due to lower volumes on large-scale building and places projects in the Middle East, where our involvement has reduced compared to this time last year. The total backlog in EMEA was approximately $1.5 billion, up 15% versus the third quarter of 2024. mainly driven by new bookings in the buildings and places and industrials end market. In the Middle East, while opportunities still present themselves in buildings and places, we're seeing increased demand for our services in large scale transportation projects, such as our focus is on transportation projects in the near term. But we will continue to closely monitor substantial building opportunities, such as preparing for the 2034 World Cup in Saudi Arabia. In Asia, we're seeing sustained investments in infrastructure and transportation mainly fueled by Hong Kong's northern metropolis. In Australia, we are focused on expanding our presence through opportunities that leverage our global expertise in transportation, power, and defense. I'd like to now move to slide nine and discuss