WSP Global Inc.

Good morning, everyone. Welcome to WSP's second quarter 2024 results conference call. I would now like to turn the meeting over to Quentin Weber, Investor Relations. Please go ahead, Mr. Weber.

Good morning, and thank you for joining us today. We will discuss our Q2 2024 performance, followed by a Q&A session. Alexandre, our President and CEO, and Alain Michaud, our CFO, are joining us this morning. Please note that this call is also accessible via webcast on our website. During the call, we will make forward-looking statements. Actual results could differ from those expressed or implied. We undertake no obligation to update or revise any of these statements. Relevant factors that could cause actual results to differ materially from those forward-looking statements are listed in our MD&A for the quarter that ended June 29, 2024, which can be found on CDAR and on our website. In addition, during the call, we may refer to specific non-IFRS measures. These measures are also defined in our MD&A for the June 29, 2024 quarter. Our MD&A includes reconciliations of non-IFRS measures to the most directly comparable IFRS measures. Management believes that these non-IFRS measures provide useful information to investors regarding the corporation's financial condition and results of operations as they provide additional critical metrics of its performance. These non-IFRS measures are not recognized under IFRS, do not have any standardized meaning, prescribed under IFRS and may differ from similarly named measures reported by other issuers and accordingly may not be comparable. These measures should not be considered as a substitute for the related financial information prepared by IFRS. With that, I will now turn the call over to Alexandre.

Thank you Quentin and good day everyone. I'm pleased to share some exciting updates about our performance and the great momentum we are generating to keep pushing WSP forward. We delivered a strong second quarter with sustained organic growth and a significant increase in profitability, which has led us to raise our 2024 financial outlook. We continue to build on our proven track record of successful results, once again showing our ability to generate sustainable financial performance. This quarter was marked by several achievements with the following three core drivers fueling our robust results. First, we delivered quality organic growth supported by healthy market conditions in our key regions. This quarter, we achieved notable double-digit organic growth in the Americas with our core and market sectors continuing to bolster our North American business. Our backlog is healthy and overall demand for our services remains solid. We are playing an active role in developing infrastructure megaprojects We are still capitalizing on hypergrowth and data center and healthcare, and our multidisciplinary team of environmental experts is supporting our clients' growing needs related to the green transition, biodiversity, and sustainable solution. Second, we sustain our ability to produce industry-leading profitability. The implementation of various global initiatives, such as our simplification program, rigorous project selection process, and improved productivity measures continue to bear fruit. In the last quarter, we reported a 50 basis point margin expansion, and we continue to perform at the top quartile of our stated ambition, which targets a 30 to 50 basis point increase in adjusted EBITDA margin annually. Third, our sustained progress and focus on transforming our business and our capacity to deliver a strong cash profile are tracking positively. As of Q2 2024, our workforce is leveraging our new ERP, which has now been deployed in key regions that account for approximately 75% of our EBITDA. Of importance, we remain on plan and budget. As we continue our journey of transformation, we reinforce our financial position heading into the second half, ending the quarter with a superior level of free cash flow compared to the previous year. Acquisitions remain a critical part of our journey in accelerating our growth and allowing us to expand our capabilities. Since the start of this year, we have been active, yet disciplined in executing this pillar of our strategy. Following the acquisition of Comunica and Proxen in the first quarter of the year, we completed the acquisition of 1A Engineeros in May, a 250-employee Spanish consulting firm mainly active in the power and energy sector and in the integration is progressing as planned. We also welcome 365 professionals through AKF Group, a specialized mechanical, electrical, and plumbing firm operating throughout the eastern United States with an additional complementary presence in Mexico. In the first half of the year, we announced four acquisitions, adding critical expertise to our portfolio, and the pipeline of opportunities remains strong. Let me now give you a few examples of our most recent project wins. In Canada, WSP provides engineering services for the new state-of-the-art Advanced Medical Research Centre at the University of Ottawa. The seven-storey building targets LEED's goal certification and will house the Ottawa Health Innovation Hub, a new strategic initiative created by the region's health research community to connect academia, industry, regulators, the region's hospital and affiliated research institutes. Our team will contribute to mechanical and electrical engineering, energy modeling, sustainability and LEED services, building science services, landscape architecture, acoustic and municipal planning. In the U.S., WSP will lead the design of the Seattle Tacoma International Airport Industrial Wastewater Treatment Plant. This project will upgrade the treatment of airfield stormwater associated with aircraft fueling and maintenance operation, such as de-icing. It includes a new control building, the expansion and portioning Partitioning, I'm so sorry, of a large storage lagoon, pump stations, improved operation controls and electrical infrastructure. We will help the project meet its sustainability goals, increase capacity and operational flexibility and achieve permit compliance. In Europe, we are proud to be part of the Grand Paris Express project in France, where 200 kilometers of new subway lines are being built. WSP will design the tunnels, branches, and ancillary structures on line 15 of this project and work with two key partners. This contract demonstrates our increased presence and potential in Central Europe, as well as how quickly our acquisition becomes synergistic since this contract originated from BG acquisition closed in 2023. While the range of projects our WSP experts consult on and deliver vary widely, they all embody our shared purpose of building a more sustainable world. We lead by example to gain our clients' trust and strive to uphold the highest ESG standard in all of our operations. We recently reported on our progress to our 2023 Global ESG Report, published in May. It provides resounding examples of the extent of our efforts on that front. We proudly reported an increase in NSDG linked revenue to 63.4% of total annualized gross revenue in 2023, a great indication of our impactful contribution to advancing sustainability through our services with the latest industry best practices and global standards by conducting a double materiality assessment. We now evaluate financial and impact materiality and are working to embed it further in our business strategy. We also increased our global average employee retention rate by over 1% year-over-year and filled over three-quarters of our global leadership roles with internal candidates, meeting our targets for both objectives. I invite you to read more on WSP and PAC worldwide by downloading our report. On ESG progress and deep expertise, Gartner and industry distinctions this quarter. For a fourth year, WSP was recognized as one of Canada's best 50 corporate citizens by corporate nights. This marked our fourth straight year on the list and our best ranking yet at number five. This accolade followed our earlier appearance on corporate night global 100 most sustainable corporation list last January. We also receive a record four Environment Analyst Sustainability Delivery Awards, including the Sustainability Impact Award for the second consecutive year, a recognition giving that to a company that walks the talk in advancing its climate leadership and ESG journey. Finally, WSP won four categories at the UK New Civil Engineering Annual Awards, and we were named the 2024 Consultants of the Year. The judges commended our commitment to excellence, innovation, and our people-first approach. These distinctions highlight our leading scores in governance, environmental, metrics, diversity, and more. On that note, I will ask Alain to review our financial results in greater detail.

Thank you, Alex, and hello, everyone. I'm pleased to report on our strong second quarter results, starting with our top line. For the second quarter, revenues and net revenue reached $4 billion and $3 billion of 8.5% and 9.1% respectively compared to the second quarter of 2023. Organic growth and net revenue of 8% in the quarter is attributable to all reportable segments led by the U.S. and Canada with double-digit growth, the U.K. and New Zealand. As of June 29, 2024, the backlog reached a record level of $14.7 billion, representing 11.9 months of revenue, following a robust organic order intake of approximately $4.3 billion in the quarter. Moving on to profitability, adjusted EBITDA reached $520 million, an increase of 12.6% from the second quarter of 2023, compared to $462 million. Adjusted EBITDA margin for the quarter increased by 50 basis points to 17.4% compared to 16.9% in the second quarter of 2023. The increase is mainly attributable to improved productivity. Our adjusted net earning reached $236 million, or $1.89 per share, both up 21% compared to the second quarter of 2023. The increase is mainly attributable to higher adjusted EBITDA. As for our cash position, cash inflows from operating activities of $203 million in the quarter ended June 29, 2024, improved compared to $85 million in the corresponding quarter last year. Free cash inflow for the quarter ended June 29, 2024, was $75 million, an improvement of $133 million compared to free cash outflow of $57 million in the corresponding quarter of 2023. At the end of June, our DSO stood at 79 days within management's target range. Our balance sheet remained strong with a net debt position of 1.7 times EBITDA within management's target range. The financial outlook for 2024 issued in the Q4 2023 press release has been increased. Net revenues are now expected to range between $11.4 billion and $11.8 billion. An adjusted EBITDA is expected to range between $2.1 billion and $2.14 billion, representing an EBITDA margin of 18.3% at midpoint. Organic growth calculated on a constant currency basis is now anticipated to be between 6% and 8%. All other key related assumptions are reiterated. On that, back to you, Alex.

Thank you, Alain. We conclude the first half of 2024 in a position of strength with robust financial results and increased financial outlook, dynamic pipeline of M&A opportunities, and a strong balance sheet to power our ambitions. Our path for the second half is clear. We set a solid foundation and are well positioned to build on this momentum as the year progresses. Our key areas of focus remain largely unchanged with efforts geared towards securing quality organic growth, seizing acquisition opportunities while enhancing our margin profile and cash position. With this approach, we're on track to realize our 2024 goals and I'm confident in our ability to close out the current strategic cycle on a high note. Being an undisputed leader is well within our reach. We have incredible people, a unique global platform, and the right strategy for success. In an industry filled with opportunities, we are just getting started, and our teams are already hard at work planning our next strategic plan. I would now like to open the line for questions.

Thank you. If you wish to ask a question, you'll need to press star one and one on your telephone and wait for your name to be announced. And to withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. Thank you. We'll now take our first question. This is from the line of Jacob Bull from CIBC. Please go ahead.

Good morning.

Hello, Jacob.

Maybe to kick it off, you know, seeing strong organic growth in, you know, Canada, Americas and EMEA, but, you know, APAC was lower. But when I look at your backlog quarter and quarter, you know, strong growth there, you Maybe just talk us through how things are looking there. Is the outlook looking a little better for the second half or for the remainder of the year?

Yeah. Well, first of all, we're extremely pleased with our performance in the first half of this year, Jacob. I mean, I think this is a testament of the diversification and resiliency of our platform, right? In previous years, we have seen some of the regions perhaps not performing as well as they are now. I can only think of, for example, the Nordics. I'd say last year was more of a quiet year with the war on Ukraine and with Russia and the cooling off of the regions at that period of time. This year, a bit like late last year, Asia is going through a rough patch. It's a very small portion of our business and our operation. And yes, you're right in pointing out that North America right now is doing extremely well. I'm extremely pleased with our performance of our U.S. business in the last quarter and believe that this will continue. So overall, I think it's looking good. Perhaps Asia Pacific, a few comments on this. There was an election in New Zealand which slowed down perhaps the tendering and the procurement of infrastructure projects, but we believe that this is temporary and we'll get back to normal very soon.

Thank you. Maybe my second question here. I know it gets asked every quarter on M&A, but You know, you did a number of smaller acquisitions earlier this year, but maybe just talk through how the pipeline is looking for the mid to larger size acquisitions.

Very good question, Jacob. If you recall when we started the year, the way I described 2023, I said that last year was a year of consolidation, a year of transformation. In the last quarter, we have now our U.S. business and our UK business on the new ERP platform. So we have now 75% of our EBITDA converted on the new platform and felt that this was a very, very important milestone to get to. So now that I feel we have significantly de-risked our transformation and ERP conversion, I can tell you now that we're open for business.

Thank you.

Thank you. We'll now take our next question. This is from Benoit Poirier from Desjardins Capital Markets. Please go ahead.

Good morning, everyone. Hello, Benoit. Just coming back on the margin question per region, obviously strong performance from Canada and America. You mentioned some color about Asia, but could you maybe provide more details also for AMIA? You mentioned that the margin performance was due to project performance, but I'm just curious what we should expect from AMIA and also kind of the path toward Margin recovery more specifically in Asia in the second half and kind of the key actions that you are taking In terms to adjust productivity in those two regions So as it relates to AMIA margins are down 60 bits on the quarter, but flat year today This is project performance in one specific country

where we deliver slightly lower margin on the project level. This is not a case of significant write-offs or problematic projects, so we expect margin growth in AMIA for the full year, and this has been reflected in our revised outlook. As it relates to Asia and APAC specifically, it's important to point out that Putting Asia aside, Australia and New Zealand are 120 basis points up in terms of margin for the quarter and about the same for year-to-date, so driving a lot of efficiency on productivity, so utilization, use of our complementary resource center. The Australian team is doing particularly well on that front. and New Zealand as well, so we're very pleased with the performance of our ANZ business. Asia, we expect the situation to continue to be challenging for the remainder of the year, and this has been reflected in our outlook as well, and we are taking action as we see fit to adjust to the situation.

okay perfect just in terms of that count you added about 2 100 people sequentially obviously about half came from north america what should we expect in terms of account additions for uh the reminder of the year in order to achieve your 2024

Benoit, I'm so pleased that you're bringing this up. I think we're ahead of plan regarding our hiring, and that combined with a significant reduction in turnover, I feel that we're extremely well positioned for the remainder of 2024. So when you look at the first half, you look at Q2, strong organic growth, increased margin profile, significant improvement in free cash flow, growth in EBITDA, reduction in turnover, and a head of plan on hiring, let's put it this way, and a very strong North American performance. Let's say that we're feeling good at the moment.

Okay, that's great. And last question for me. On the free cash flow side, you achieve negative $50 million year-to-date. Obviously, we know a bit about the season LTE, but while you still target, I believe, a 100% free cash flow conversion for the year. So, could you provide maybe some color, Alain, about what we should expect in Q3 and your confidence to finish the year with a strong performance on the free cash flow side?

Thank you, Benoit. We're very pleased of the trend that we've posted in Q2 in terms of free cash flow. So the seasonality of our business, as you know, Benoit, the Q2 is always we're ramping up and the high growth obviously puts working cap on the balance sheet. Q3 is usually a similar type quarter in terms of free cash flow and DSO. And we see, historically, we've seen a sharp reduction in DSO and increase in free cash flow in Q4. So we expect about the same trend for 2024. We're pleased with the progress on the ERP and the billing and the collection, so very good trending results so far. Our DSO has increased, yes, but if you look at the historical average the last five years, DSO between Q4 and Q2 typically increased by about five days. And this quarter, this year, we've seen a three-day increase, and that is despite going live with the new ERP in the U.S. towards the middle of Q1 and the new ERP in the U.K. in the beginning of Q2. So we're very, very pleased with the performance in those two regions adapting to the new system. And it's a testament of the lessons learned and improvement we were able to post on that front. And I think it bodes well for the reminder of the rollout on that front. So feeling good about progress we're making. Thank you very much for your time.

Thank you, Benma.

Thank you. Next question is from the line of Michael Tappum from TD Cowan. Please go ahead.

Thank you. Good morning. Hello, Michael.

Good morning. First question is about the U.S., and I guess specifically wondering if you can talk about what you're seeing in terms of IIJA activity levels in the U.S. and the ramp-up in IIJA investment, including whether or not you've seen any bottlenecks or slowdowns on that ramp-up.

No, absolutely not, Michael. I mean, the The flow is great and we're forging ahead on all fronts. I'm not in a position to talk about certain bits that we're working on right now on the CHIP acts for instance, but whether we are looking at the infrastructure project or CHIP acts project or the inflation act projects, things are going extremely well at this point.

Okay, that's great to hear. And then maybe somewhat related, you mentioned earlier in the call that with respect to New Zealand, you had seen a bit of a slowdown around elections in that country. I'm wondering, when we look at the US, have you seen or are you expecting to see any slowdown in activity as we approach the election? And if so, in what areas do you see that likely to happen?

The answer is, and this is a personal opinion, Michael. I'm not a specialist in US politics, but my personal opinion is the answer is no. Let's remember that whether the Republican or Democrat take the House in November, they're going to have two years left to deploy the capitals. So I think, and that had bipartisan support. certainly as it relates to the Infrastructure Act. So I don't believe that this will have an impact. Remember that WSP, we perform well under the Trump administration, and we have performed very well also under the Biden administration. So for us, at the end of the day, I think whether it's a Republican president or a Democrat president, we feel that WSP is very well positioned to take advantage of what will take place over the next few years.

That's helpful. Thank you. And then maybe just one last one here. I'm wondering if you can talk about what you're seeing in terms of activity on the private sector side in your property and buildings business across key regions and specifically as we've seen interest rates start to come down, has that affected activity at all in that area?

Last year we have We generated double-digit organic growth in our property and building sector, and this year is not any different. The demand in data centers and our work in healthcare is really fueling the growth at the moment. And indeed, we are seeing an uptick in the private sector activity. So I'm feeling extremely good around this sector at the moment, Michael. Okay, I'll leave it there. Thank you.

Thanks, Michael.

Thank you. Next question comes from Chris Murray from ATB Capital Markets. Please go ahead.

Yeah, thanks, guys. Good morning. I guess my first question is just thinking about the rest of the year. I think when you originally released your guidance, you talked about the fact that there'll probably be about a 3% increase just organically, just because of the way the days fall in the year. And so what I was thinking about that and looking at you know kind of historical emerging trends kind of second half versus first half Just wondering you know with where your guidance is it almost feels like we're going to be Call it a you know kind of flattish year-over-year, but I just wanted to get any thoughts that you may have around How the back half of the year shakes up with that with those additional days in there? And if there's something that maybe throws a margin profile around a little bit Yeah, so

Just to recalibrate a little bit the growth, so we're posted 8% in Q2, first asked 6.4 as highlighted, but there was more billable days and less billable days in Q1. So if you normalize that, our growth for the first six months is 7%. Our guide is between six and eight for the full year. So that's the organic growth trend. Q4 will have more billable dates, so you'll see the reversal of Q1. In terms of margin, historically, at least the last two years, we've seen more emphasis on margin improvement in the second half of the year. We're very pleased with the first half contribution this year with 50 bps improvement in the first six months. That's testament to all of the hard work we've pushed on the second half of 2023 to increase productivity. And it's paying off right now, and we expect this to continue to provide some good tailwind in the second half. And we're very committed to that 60 bps plus margin improvement in 2024, which would position us at the higher end of the three-year target we've posted in our strategic plan of 150 basis points. So we're very, very pleased with the trajectory of our margin profile.

Okay, that's awesome. And then the other piece of this, you know, just looking at global corporate costs, and I don't know if this is tied to the ERP completion in a lot of the key regions, but when we looked at the numbers, you know, they actually were, you know, again, it's a modest number, but it's still marginally below that kind of plus or minus $30 million in the quarter. Just wondering, you know, with the ERP system in place now or if there's something else going on, like how should we be thinking about global corporate costs over, you know, maybe the balance of 24 and through 2025?

Yeah, the slight reduction that you see in the first half is really timing of projects that we've undertaken in the first half versus what we're planning to do second half. So we're still within the the range that we've provided in our outlook, Chris, so no sizable change there, although we're probably going to be midpoint is probably the right answer there. The ERP itself, I don't expect impact on that front end 24, but starting 25, I think it certainly is one more tool in our toolbox to keep driving better margin. So we're currently focusing on the rollout and implementing and refining, recalibrating. But the next stage of the journey is to capture benefit and opportunities as it relates to the system.

All right. Thank you, folks. I'll leave it there. Thank you.

Thank you. As a reminder, if you would like to ask a question, you can press star 1 and 1 on your keypad. That's star 101 to ask a question. The next question is from the line of Frederic Bastien from Raymond James. Please go ahead.

Thanks. Good morning. Guys, I know that you constantly look at M&A opportunities, but wondering if you're more excited about what you're seeing today perhaps than what your feeling was like six months ago or 12 months ago.

The answer is yes, Frederick.

More excited now than I was six months ago. As I said, the focus last year was really geared to, we had more of an inward focus last year, consolidating the Woody and I transaction. And obviously, doing tuck-in acquisition in my mind was not impacting our risk on the transformation that we were going through. But now that we have 75% of our EBITDA converted, and given the discussion that I've had in recent months, I'm feeling a lot better today than I was six months to a year ago.

Awesome. Thanks. The other question I have regards the strong organic growth that you displayed in the Americas and the U.S. I assume this has come in from a number of sectors, but was transportation and infrastructure the bulk of the growth that you've seen there?

I wouldn't say bulk, but very strong growth, I would say, across the patch at the moment, Frederick. I feel that we're firing from all cylinders right now. And I'm glad that you're bringing up organic growth. We have worked extremely hard over the course of the last 24 months to really raise the bar from an organic growth point of view. Because we believe we, you know, they're not mutually exclusive. We believe we've been a good acquirer, a great acquirer in the past from an M&A point of view. But equally, we wish to demonstrate to our investors that we can expand can generate strong organic growth as well. So with that in mind, I mean, what we're aiming at is to really generate very good inorganic growth and also very good organic growth. That's the goal that we have in mind at the moment.

Well, you're sure delivering, so on both fronts. Thanks. That's all I have. Thank you, Frederick.

Thank you. Next question is from the line of Maxim Sichev from NBF. Please go ahead. Hi, good morning, gentlemen.

Hello, Max.

Alex, I just had one quick follow-up in terms of M&A. I'm curious to see if there is a bit of multiple differential right now between what you might be seeing in the U.S. versus continental Europe, or is it just a function of size on the platform that really is driving the differential multiples?

Thanks.

Yeah, I think, Max, geography is not as much. It's more, you know, the sector that, in my personal opinion, will drive the margins, not the margins, I'm sorry, the multiple differential. You know, and obviously this is the love of Matt, obviously, in very high growth, high return sectors. You can't expect to pay a higher multiple than perhaps in other sectors, but also the size of the platform will also have an impact on this. What I would tell you is that not much has changed actually. The formal and informal discussion that I've had with firms in continental Europe and in the Nordics and in other places has been healthy. So I do expect us to get back to it now that we have significantly de-risked our transformation.

Okay, that's great. Thank you so much. That's it for me.

Thank you.

Thank you. We'll take our next question. This is from Sabat Khan from RBC. Please go ahead.

Great. Thanks and good morning. Just a question, I guess, on the kind of the margin outlook here. You know, I think some of the commentary from the team has been that 20% is much more within reach today than when you initially talked about it. Maybe just as a reminder of, given where you're at, 18.3%, if you can just remind us of maybe the bigger buckets of opportunities that you have within your business that would drive the margin higher, that would be helpful. Thanks.

Yeah, well, the number one lever, obviously, Sabah, is you have to operate in good markets. And with the exception of Asia, which represents a very, very small portion of our book of business, we are operating in great markets. The supply-demand dynamics in Canada, in the U.S., in the U.K., now in the Nordics, I feel better around Sweden. Same with Australia and New Zealand. We're clearly feeling good that we are operating in the right markets at the moment, number one. Number two, we've made a significant push in running a tighter ship as a company over the last 12 months. Not that we were not in the past, but we feel we can always improve, and that has paid off. Number two. Number three, we are going, I believe, to benefit from the transformation that has taken place over the course of the last 24 months. And I'm hopeful, and I'm looking at Alain in the eyes as I'm talking, that we are going to be able to generate the synergistic benefits of being on one platform globally and running a more optimal business. Number three as well, and we'll talk more about that when we roll out our next strat plan. I mean, also, You know, we're leveraging technology in a big way right now. And we believe that in the next three years, there'll be a lot of formidable things that will happen to our industry. And we want to be at the forefront of that. And we want to lead from the front. So that's why I'm feeling good about the 20% margin profile. And it's certainly a goal that we have in mind and that we have not forgotten that we're, you know, 200% focused on at the moment.

Great. Thanks for the color. And just to follow up on the comment around the right markets, I guess, you know, is this just a process where the smaller markets that you're not focused on will naturally just become de-emphasized and partly through M&A? Or is there, you know, as you look across your portfolio, is there end markets that might be a bit, you know, just not interesting anymore or regions like Asia where you might just de-emphasize that naturally through sort of the way projects flow? And just any comment on how you view the portfolio today?

I like our portfolio. I feel at the moment, Sabah, and I've mentioned it in the past and I'll mention it again, in excess of 90% of our profits are generated in OECD countries and our strategy hasn't changed. So if I had an opportunity to grow our presence in continental Europe, I would. This is a great place to do business. In the U.S., we are subscale in many parts of the U.S. and in many sectors, so you should expect us to continue to focus on our U.S. business. There's room for us to grow in Australia. There's room for us to grow in New Zealand and even Canada, where we have, I'd like to think, the leading presence. I feel there's ample room for us to continue to grow. So expect us to not de-emphasize the markets that we're in. Obviously when a country or region is going through a rougher patch, just in relative terms, obviously the region is having a lesser presence than perhaps the others that are growing. But other than that, I think that's where we stand. We really like our footprint at the moment, and we intend to pursue in that direction.

Okay, and then just one last quick one. There was some discussion earlier around just some of the seasonality in Q4 with extra day, and you haven't noticed any slowdown in the U.S., but I guess just in terms of Q3 versus Q4, do you typically see an election year where maybe things pause a little bit in Q3 or a little bit in Q4 along the time of the election? Just thinking... if we should consider that for our models when we think about H2 in terms of shift between those two quarters at all? I would not, Shama.

I would keep the same seasonality that we've highlighted in our outlook in February. Great.

Thanks very much. Thank you.

Thank you. We'll take our next question. And this is from Ian Gillies from Stiefel. Please go ahead.

Morning, everyone. Morning.

As it pertains to the earth and environmental business, and it's obviously been what I believe to be an above-average grower over the last number of years on an organic basis, are you seeing anything coming down the pipe that would cause that narrative to change or any headwinds in that business at the moment?

No, not at this point. Obviously, what do I? Clearly, we're not aware of anything at this point that would change that in the immediate terms, obviously, Ian. But actually, I feel that if everything remains the same, we should do better going forward because the integration of a firm of 6,000, 7,000 people like Woody and I combined with an integration of 6,000, 7,000 people at Golder In addition to all the tuck-ins that we completed in recent years, that required a lot of work from an integration point of view. And that can oftentimes distract our operation from being outward focused and perhaps being a bit more inward focused. So if any, now that we're past that, I'm feeling, assuming everything stays the same, I'm feeling very good about the sector.

No, that's helpful, and maybe just drilling down into that division a little bit, I'm just curious whether you've seen any step change in demand or any change in how you're trying to position for PFAS work in the U.S., because that seems to be topical still.

It's the flavor of the day, I'm not going to lie, and we have won many awards. Obviously, most of our work in that regard is with the Department of Defense. And in recent months, we have secured many awards. So I think we're forging ahead on that front. And I feel we have excellent capabilities in that regard to really forge ahead and take a leadership position.

That's helpful. And then if I could sneak in one last quick one, just based on the prior question. In previous calls, I think you had mentioned on wanting to add capacity in the U.S. and geographically, I think it was specifically Texas and Florida. Would that still hold true today, or is there new regional geographies in the U.S. that we should be thinking about as well?

Look, historically, given our footprint and the acquisition that we completed, we've always been perhaps... had a larger presence or a more important presence in the Northeast. And I would say in the last five, six, seven years, we've grown organically in a very significant way out West. But if I had to guess, I think if you look at the Midwest and the Midwest of the United States, I feel we're subscale. I talked about the southern states in a number of occasions. I feel we're subscale. And clearly, California on its own, it's a country. So we could double in size and not have a problem. So the reality is I think we have a lot of room to maneuver, perhaps with the exception of the Northeast where we have a larger presence and we're feeling good about the platform that we have.

Thank you very much. That's helpful detail. I'll turn the call back over. Thank you.

Thank you. And I will now hand the conference back to the speakers for any closing remarks. Thank you.

Well, thank you for attending the call today. Thank you for all your great questions, and we look forward to updating you as we embark into our second half of this year and look forward to updating you on our plans going forward. Thank you very much, and I wish you a great day.

Thank you. This concludes today's conference. Thank you for participating and you may now disconnect. Thank you. you Thank you. Thank you. Thank you. Good morning, everyone. Welcome to WSP's second quarter 2024 results conference call. I would now like to turn the meeting over to Quentin Weber, Investor Relations. Please go ahead, Mr. Weber.

Good morning, and thank you for joining us today. We will discuss our Q2 2024 performance, followed by a Q&A session. Alexandre, our President and CEO, and Alain Michaud, our CFO, are joining us this morning. Please note that this call is also accessible via webcast on our website. During the call, we will make forward-looking statements. Actual results could differ from those expressed or implied. We undertake no obligation to update or revise any of these statements. Relevant factors that could cause actual results to differ materially from those forward-looking statements are listed in our MD&A for the quarter that ended June 29, 2024, which can be found on CDAR and on our website. In addition, during the call, we may refer to specific non-IFRS measures. These measures are also defined in our MD&A for the June 29, 2024 quarter. Our MD&A includes reconciliations of non-IFRS measures to the most directly comparable IFRS measures. Management believes that these non-IFRS measures provide useful information to investors regarding the corporation's financial condition and results of operations as they provide additional critical metrics of its performance. These non-IFRS measures are not recognized under IFRS, do not have any standardized meaning, prescribed under IFRS and may differ from similarly named measures reported by other issuers and accordingly may not be comparable. These measures should not be considered as a substitute for the related financial information prepared by IFRS. With that, I will now turn the call over to Alexandre.

Thank you, Quentin, and good day, everyone. I'm pleased to share some exciting updates about our performance and the great momentum we are generating to keep pushing WSP forward. We delivered a strong second quarter with sustained organic growth and a significant increase in profitability, which has led us to raise our 2024 financial outlook. We continue to build on our proven track record of successful results, once again showing our ability to generate sustainable financial performance. This quarter was marked by several achievements with the following three core drivers fueling our robust results. First, we delivered quality organic growth supported by healthy market conditions in our key regions. This quarter, we achieved notable double-digit organic growth in the Americas with our core and market sectors continuing to bolster our North American business. Our backlog is healthy and overall demand for our services remains solid. We are playing an active role in developing infrastructure megaprojects We are still capitalizing on hypergrowth and data center and healthcare, and our multidisciplinary team of environmental experts is supporting our clients' growing needs related to the green transition, biodiversity, and sustainable solution. Second, we sustain our ability to produce industry-leading profitability. The implementation of various global initiatives, such as our simplification program, rigorous project selection process and improved productivity measures continue to bear fruit. In the last quarter, we reported a 50 basis point margin expansion and we continue to perform at the top quartile of our stated ambition, which targets a 30 to 50 basis point increase in adjusted EBITDA margin annually. Third, our sustained progress and focus on transforming our business and our capacity to deliver a strong cash profile are tracking positively. As of Q2 2024, our workforce is leveraging our new ERP, which has now been deployed in key regions that account for approximately 75% of our EBITDA. Of importance, we remain on plan and budget. As we continue our journey of transformation, we reinforce our financial position, heading into the second half ending the quarter with a superior level of free cash flow compared to the previous year. Acquisitions remain a critical part of our journey in accelerating our growth and allowing us to expand our capabilities. Since the start of this year, we have been active yet disciplined in executing this pillar of our strategy. Following the acquisition of Comunica and Proxen in the first quarter of the year, we completed the acquisition of 1A Ingenieros in May, a 250-employee Spanish consulting firm mainly active in the power and energy sector and in the integration is progressing as planned. We also welcome 365 professionals through AKF Group, a specialized mechanical, electrical, and plumbing firm operating throughout the eastern United States with an additional complementary presence in Mexico. In the first half of the year, we announced four acquisitions, adding critical expertise to our portfolio, and the pipeline of opportunities remains strong. Let me now give you a few examples of our most recent project wins. In Canada, WSP provides engineering services for the new state-of-the-art Advanced Medical Research Centre at the University of Ottawa. The seven-storey building targets LEED's goal certification and will house the Ottawa Health Innovation Hub, a new strategic initiative created by the region's health research community to connect academia, industry, regulators, the region's hospitals, and affiliated research institutes. Our team will contribute to mechanical and electrical engineering, energy modeling, sustainability, and LEED services, building science services, landscape architecture, acoustic and municipal planning. In the U.S., WSP will lead the design of the Seattle Tacoma International Airport Industrial Wastewater Treatment Plant. This project will upgrade the treatment of airfield stormwater associated with aircraft fueling and maintenance operation, such as de-icing. It includes a new control building, the expansion and portioning Partitioning, I'm so sorry, of a large storage lagoon, pump stations, improved operation controls, and electrical infrastructure. We will help the project meet its sustainability goals, increase capacity and operational flexibility, and achieve permit compliance. In Europe, we are proud to be part of the Grand Paris Express project in France, where 200 kilometers of new subway lines are being built. WSP will design the tunnels, branches, and ancillary structures on line 15 of this project and work with two key partners. This contract demonstrates our increased presence and potential in Central Europe, as well as how quickly our acquisition becomes synergistic since this contract originated from BG Acquisition closed in 2023. While the range of projects our WSP experts consult on and deliver vary widely, they all embody our shared purpose of building a more sustainable world. We lead by example to gain our clients' trust and strive to uphold the highest ESG standard in all of our operations. We recently reported on our progress to our 2023 Global ESG Report, published in May. It provides resounding examples of the extent of our efforts on that front. We proudly reported an increase in NSDG linked revenue to 63.4% of total annualized gross revenue in 2023, a great indication of our impactful contribution to advancing sustainability through our services with the latest industry best practices and global standards by conducting a double materiality assessment. We now evaluate financial and impact materiality and are working to embed it further in our business strategy. We also increased our global average employee retention rate by over 1% year-over-year and filled over three-quarters of our global leadership roles with internal candidates, meeting our targets for both objectives. I invite you to read more on WSP and PAC worldwide by downloading our report. On ESG progress and deep expertise, Gartner and industry distinctions this quarter. For a fourth year, WSP was recognized as one of Canada's best 50 corporate citizens by Corporate Knights. This marked our fourth straight year on the list and our best ranking yet at number five. This accolade followed our earlier appearance on Corporate Knight Global 100 Most Sustainable Corporation list last January. We also receive a record four Environment Analyst Sustainability Delivery Awards, including the Sustainability Impact Award for the second consecutive year, a recognition giving that to a company that walks the talk in advancing its climate leadership and ESG journey. Finally, WSP won four categories at the UK New Civil Engineering Annual Awards, and we were named the 2024 Consultants of the Year. The judges commended our commitment to excellence, innovation, and our people-first approach. These distinctions highlight our leading scores in governance, environmental, metrics, diversity, and more. On that note, I will ask Alain to review our financial results in greater detail.

Thank you, Alex, and hello, everyone. I'm pleased to report on our strong second quarter results, starting with our top line. For the second quarter, revenues and net revenue reached $4 billion and $3 billion of 8.5% and 9.1% respectively compared to the second quarter of 2023. Organic growth and net revenue of 8% in the quarter is attributable to all reportable segments led by the U.S. and Canada with double-digit growth, the U.K. and New Zealand. As of June 29, 2024, the backlog reached a record level of $14.7 billion, representing 11.9 months of revenue, following a robust organic order intake of approximately $4.3 billion in the quarter. Moving on to profitability, adjusted EBITDA reached $520 million, an increase of 12.6% from the second quarter of 2023, compared to $462 million. Adjusted EBITDA margin for the quarter increased by 50 basis points to 17.4% compared to 16.9% in the second quarter of 2023. The increase is mainly attributable to improved productivity. Our adjusted net earning reached $236 million, or $1.89 per share, both up 21% compared to the second quarter of 2023. The increase is mainly attributable to higher adjusted EBITDA. As for our cash position, cash inflows from operating activities of $203 million in the quarter ended June 29, 2024, improved compared to $85 million in the corresponding quarter last year. Free cash inflow for the quarter ended June 29, 2024, was $75 million, an improvement of $133 million compared to free cash outflow of $57 million in the corresponding quarter of 2023. At the end of June, our DSO stood at 79 days within management's target range. Our balance sheet remained strong with a net debt position of 1.7 times EBITDA within management's target range. The financial outlook for 2024 issued in the Q4 2023 press release has been increased. Net revenues are now expected to range between $11.4 billion and $11.8 billion. An adjusted EBITDA is expected to range between $2.1 billion and $2.14 billion, representing an EBITDA margin of 18.3% at midpoint. Organic growth calculated on a constant currency basis is now anticipated to be between 6% and 8%. All other key related assumptions are reiterated. On that, back to you, Alex.

Thank you, Alain. We conclude the first half of 2024 in a position of strength with robust financial results and increased financial outlook, dynamic pipeline of M&A opportunities, and a strong balance sheet to power our ambitions. Our path for the second half is clear. We set a solid foundation and are well positioned to build on this momentum as the year progresses. Our key areas of focus remain largely unchanged, with efforts geared towards securing quality organic growth, seizing acquisition opportunities while enhancing our margin profile and cash position. With this approach, we're on track to realize our 2024 goals and I'm confident in our ability to close out the current strategic cycle on a high note. Being an undisputed leader is well within our reach. We have incredible people, a unique global platform, and the right strategy for success. In an industry filled with opportunities, we are just getting started, and our teams are already hard at work planning our next strategic plan. I would now like to open the line for questions.

Thank you. If you wish to ask a question, you'll need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. Thank you. We'll now take our first question. This is from the line of Jacob Bull from CIBC. Please go ahead.

Good morning.

Hello, Jacob.

Maybe to kick it off, seeing strong organic growth in Canada, Americas, and EMEA, but APAC was lower. But when I look at your backlog quarter-on-quarter, strong growth there, maybe just talk us through how things are looking there. Is the outlook looking a little better for the second half or for the remainder of the year?

Yeah. Yeah. Well, first of all, we're extremely pleased with our performance in the first half of this year, Jacob. I think this is a testament of the diversification and resiliency of our platform. In previous years, we have seen some other regions perhaps not performing as well as they are now. I can only think of, for example, the Nordics Last year was more of a quiet year with the war on Ukraine and with Russia and the cooling off of the regions at that period of time. This year, a bit like late last year, Asia is going through a rough patch. It's a very small portion of our business and our operations. And yes, you're right in pointing out that North America right now is doing extremely well. I'm extremely pleased with our performance of our U.S. business in the last quarter and believe that this will continue. So overall, I think it's looking good. Perhaps Asia Pacific, a few comments on this. There was an election in New Zealand. which slowed down perhaps the tendering and the procurement of infrastructure projects. But we believe that this is temporary and we'll get back to normal very soon.

Thank you. And maybe my second question here, I know it gets asked every quarter on M&A, but You did a number of smaller acquisitions earlier this year, but maybe just talk through how the pipeline is looking for the mid to larger size acquisitions.

Very good question, Jacob. If you recall, when we started the year, the way I described 2023, I said that last year was a year of consolidation, a year of transformation. In the last quarter, we have now our U.S. business and our UK business on the new ERP platform. So we have now 75% of our EBITDA converted on the new platform and felt that this was a very, very important milestone to get to. So now that I feel we have significantly de-risked our transformation and ERP conversion, I can tell you now that we're open for business.

Thank you.

Thank you. We'll now take our next question. This is from Benoit Poirier from Desjardins Capital Markets. Please go ahead.

Good morning, everyone. Hello, Benoit. Just coming back on the margin question per region, obviously strong performance from Canada and America. You mentioned some color about Asia, but could you maybe provide more details also for AMIA? You mentioned that the margin performance was due to project performance, but I'm just curious what we should expect from AMIA and also kind of the path toward

Margin recovery more specifically in Asia in the second half and kind of the key actions that you are taking In terms to adjust productivity in those two regions So as it relates to AMIA margins are down 60 bits on the quarter, but flat year today This is project performance in one specific country where we deliver slightly lower margin on the project level. This is not a case of significant write-offs or problematic projects, so we expect margin growth in AMIA for the full year, and this has been reflected in our revised outlook. As it relates to Asia and APAC specifically, it's important to point out that Putting Asia aside, Australia and New Zealand are 120 basis points up in terms of margin for the quarter and about the same for year-to-date, so driving a lot of efficiency on productivity, so utilization, use of our complementary resource center. The Australian team is doing particularly well on that front. and New Zealand as well, so we're very pleased with the performance of our ANZ business. Asia, we expect the situation to continue to be challenging for the remainder of the year, and this has been reflected in our outlook as well, and we are taking action as we see fit to adjust to the situation.

Okay, perfect. Just in terms of that count, you added about 2,100 people sequentially. Obviously, about half came from North America. What should we expect in terms of count additions for the reminder of the year in order to achieve your 2024 goal?

Benoit, I'm so pleased that you're bringing this up. I think we're ahead of plan regarding our hiring, and that combined with the significant reduction in turnover, I feel that we're extremely well positioned for the remainder of 2024. So, you know, when you look at the first half, you look at the Q2, you know, strong organic growth, increased margin profile, significant improvement in free cash flow, growth in EBITDA, reduction in turnover, and a head of plan on hiring, let's put it this way, and a very strong North American performance. Let's say that we're feeling good at the moment.

Okay, that's great. And last question for me on the free cash flow side, you achieve negative $50 million year-to-date. Obviously, we know a bit about the seasonality, but while you still target, I believe, a 100% free cash flow conversion for the year. So, could you provide maybe some color, Alain, about what we should expect in Q3 and your confidence to finish the year with a strong performance on the free cash flow side?

Thank you, Benoit. We're very pleased of the trend that we've posted in Q2 in terms of free cash flow. So the seasonality of our business, as you know, Benoit, the Q2 is always we're ramping up and the high growth obviously puts working cap on the balance sheet. Q3 is usually a similar type quarter in terms of free cash flow and DSO. And we see, historically, we've seen a sharp reduction in DSO and increase in free cash flow in Q4. So we expect about the same trend for 2024. We're pleased with the progress on the ERP and the billing and the collection, so very good trending results so far. Our DSO has increased, yes, but if you look at the historical average the last five years, DSO between Q4 and Q2 typically increased by about five days. And this quarter, this year, we've seen a three-day increase, and that is despite going live with the new ERP in the U.S. towards the middle of Q1 and the new ERP in the U.K. in the beginning of Q2. So we're very, very pleased with the performance in those two regions adapting to the new system. And it's a testament of the lessons learned and improvement we were able to post on that front. And I think it bodes well for the reminder of the rollout on that front. So feeling good about progress we're making. Thank you very much for your time.

Thank you, Benma.

Thank you. Next question is from the line of Michael Tappum from TD Cowan. Please go ahead.

Thank you. Good morning. Hello, Michael.

Good morning. First question is about the U.S., and I guess specifically wondering if you can talk about what you're seeing in terms of IIJA activity levels in the U.S. and the ramp-up in IIJA investment, including whether or not you've seen any bottlenecks or slowdowns on that ramp-up.

No, absolutely not, Michael. I mean, the The flow is great, and we're forging ahead on all fronts. I'm not in a position to talk about certain bits that we're working on right now on the CHIP-AXE, for instance, but whether we are looking at the infrastructure project or CHIP-AXE project or the Inflation Act projects, things are going extremely well at this point.

Okay, that's great to hear. And then maybe somewhat related, you mentioned earlier in the call that with respect to New Zealand, you had seen a bit of a slowdown around elections in that country. I'm wondering, when we look at the US, have you seen or are you expecting to see any slowdown in activity as we approach the election? And if so, in what areas do you see that likely to happen?

The answer is, and this is a personal opinion, Michael. I'm not a specialist in US politics, but my personal opinion is the answer is no. Let's remember that whether the Republican or Democrat take the House in November, they're going to have two years left to deploy the capitals. So I think, and that had bipartisan support. certainly as it relates to the Infrastructure Act. So I don't believe that this will have an impact. Remember that WSP, we perform well under the Trump administration, and we have performed very well also under the Biden administration. So for us, at the end of the day, I think whether it's a Republican president or a Democrat president, we feel that WSP is very well positioned take advantage of what will take place over the next few years.

That's helpful. Thank you. And then maybe just one last one here. I'm wondering if you can talk about what you're seeing in terms of activity on the private sector side in your property and buildings business across key regions and specifically as we've seen interest rates start to come down, has that affected activity at all in that area?

Last year we have We generated double-digit organic growth in our property and building sector, and this year is not any different. The demand in data centers and our work in healthcare is really fueling the growth at the moment. And indeed, we are seeing an uptick in the private sector activity. So I'm feeling extremely good around this sector at the moment, Michael. Okay, I'll leave it there. Thank you.

Thanks, Michael.

Thank you. Next question comes from Chris Murray from ATB Capital Markets. Please go ahead.

Yeah, thanks, guys. Good morning. I guess my first question is just thinking about the rest of the year. I think when you originally released your guidance, you talked about the fact that there would probably be about a 3% increase just organically just because of the way the days fall in the year. And so what I was thinking about that and looking at you know kind of historical margin trends kind of second half versus first half Just wondering you know with where your guidance is it almost feels like we're going to be Call it a you know kind of flattish year-over-year, but I just wanted to get any thoughts that you may have around How the back half of the year shakes up with that with those additional days in there? And if there's something that maybe throws the margin profile around a little bit Yeah, so

Just to recalibrate a little bit the growth, so we're posted 8% in Q2, first asked 6.4 as highlighted, but there was more billable days and less billable days in Q1. So if you normalize that, our growth for the first six months is 7%. Our guide is between six and eight for the full year. So that's the organic growth trend. Q4 will have more billable dates, so you'll see the reversal of Q1. In terms of margin, historically, at least the last two years, we've seen more emphasis on margin improvement in the second half of the year. We're very pleased with the first half contribution this year with 50 bps improvement in the first six months. That's testament to all of the hard work we've pushed on the second half of 2023 to increase productivity. And it's paying off right now, and we expect this to continue to provide some good tailwind in the second half. And we're very committed to that 60 bps plus margin improvement in 2024, which would position us at the higher end of the three-year target we've posted in our strategic plan of 150 basis points. So we're very, very pleased with the trajectory of our margin profile.

Okay. That's awesome. And then the other piece of this, you know, just looking at global corporate costs, and I don't know if this is tied to the ERP completion in a lot of the key regions, but when we looked at the numbers, you know, they actually were, you know, again, it's a modest number, but it's still marginally below that kind of plus or minus $30 million in the quarter. Just wondering, you know, with the ERP system in place now or if there's something else going on, like how should we be thinking about global corporate costs over, you know, maybe the balance of 24 and through 2025?

Yeah, the slight reduction that you see in the first half is really timing of projects that we've undertaken in the first half versus what we're planning to do second half. So we're still within the It's a range that we've provided in our outlook, Chris, so no sizable change there, although we're probably going to be midpoint is probably the right answer there. The ERP itself, I don't expect impact on that front end 24, but starting 25, I think it certainly is one more tool in our toolbox to keep driving better margin. So we're currently focusing on the rollout and implementing and refining, recalibrating. But the next stage of the journey is to capture benefit and opportunities as it relates to the system.

All right. Thank you, folks. I'll leave it there. Thank you.

Thank you. As a reminder, if you would like to ask a question, you can press star 1 and 1 on your keypad. That's star 101 to ask a question. The next question is from the line of Frederic Bastien from Raymond James. Please go ahead.

Thanks. Good morning. Guys, I know that you constantly look at M&A opportunities, but wondering if you're more excited about what you're seeing today perhaps than what your feeling was like six months ago or 12 months ago.

The answer is yes, Frederick. More excited now than I was six months ago. As I said, the focus last year was really geared to, we had more of an inward focus last year, consolidating the Woody and I transaction. And obviously, doing tuck-in acquisition in my mind was not impacting our risk on the transformation that we were going through. But now that we have 75% of our EBITDA converted and given the discussion that I've had in recent months, I'm feeling a lot better today than I was six months to a year ago.

Awesome, thanks. The other question I have regards the strong organic growth that you displayed in the Americas and in the U.S. I assume this is coming from a number of sectors, but was transportation infrastructure the bulk of the growth that you've seen there?

I wouldn't say bulk, but very strong growth, I would say, across the patch at the moment, Frederick. I feel that we're firing from all cylinders right now. And I'm glad that you're bringing up organic growth. You know, we have worked extremely hard over the course of the last 24 months to really raise the bar from an organic growth point of view. Because we believe we, you know, they're not mutually exclusive. We believe we've been a good acquirer, a great acquirer in the past from an M&A point of view. But equally, we wish to demonstrate to our investors that we can... can generate strong organic growth as well. So with that in mind, I mean, what we're aiming at is to really generate very good inorganic growth and also very good organic growth. That's the goal that we have in mind at the moment.

Well, you're delivering, so on both fronts. Thanks. That's all I have. Thank you, Frederick.

Thank you. Next question is from the line of Maxim Sichev from NBF. Please go ahead.

Hi, good morning, gentlemen.

Hello, Max.

Alex, I just had one quick follow-up in terms of M&A. I'm curious to see if there is a bit of multiple differential right now between what you might be seeing in the U.S. versus continental Europe, or is it just a function of size on the platform that really is driving the differential multiples?

Thanks. Thanks.

Yeah, I think, Max, geography is not as much. It's more, you know, the sector that, in my personal opinion, will drive the margins, not the margins, I'm sorry, the multiple differential. You know, and obviously, this is the love of Matt, obviously, in very high growth, high return sectors. You can't expect to pay a higher multiple than perhaps in other sectors, but also the size of the platform will also have an impact on this. What I would tell you is that not much has changed actually. The formal and informal discussion that I've had with firms in continental Europe and in the Nordics and in other places has been healthy. So I do expect us to get back to it now that we have significantly de-risked our transformation.

Yeah, makes sense. Okay, that's great. Thank you so much. That's it for me. Thank you.

Thank you. We'll take our next question. This is from Sabat Khan from RBC. Please go ahead.

Great. Thanks and good morning. Just a question, I guess, on the kind of the margin outlook here. You know, I think some of the commentary from the team has been that 20% is much more within reach today than when you initially talked about it. Maybe just as a reminder of, given where you're at, 18.3%, if you can just remind us of maybe the bigger buckets of opportunities that you have within your business that would drive the margin higher, that would be helpful.

Thanks. Yeah, well, the number one lever, obviously, Sabah, is you have to operate in good markets. And with the exception of Asia, which represent a very, very small portion of our book of business, we are operating in great markets. The supply-demand dynamics in Canada, in the U.S., in the U.K., now in the Nordics, I feel better around Sweden. Same with Australia and New Zealand. We're clearly feeling good that we are operating in the right markets at the moment, number one. Number two, we've made a significant push in running a tighter ship as a company over the last 12 months. Not that we were not in the past, but we feel we can always improve, and that has paid off. Number two. Number three, we are going, I believe, to benefit from the transformation that has taken place over the course of the last 24 months. And I'm hopeful, and I'm looking at Alain in the eyes as I'm talking, that we are going to be able to generate the synergistic benefits of being on one platform globally and running a more optimal business. Number three as well, and we'll talk more about that when we roll out our next strat plan. I mean, also, You know, we're leveraging technology in a big way right now. And we believe that in the next three years, there'll be a lot of formidable things that will happen to our industry. And we want to be at the forefront of that. And we want to lead from the front. So that's why I'm feeling good about the 20% margin profile. And it's certainly a goal that we have in mind and that we have not forgotten that we're, you know, 200% focused on at the moment.

Great. Thanks for the color. And just to follow up on the comment around the right markets, I guess, you know, is this just a process where the smaller markets that you're not focused on will naturally just become de-emphasized and partly through M&A? Or is there, you know, as you look across your portfolio, is there end markets that might be a bit, you know, just not interesting anymore or regions like Asia where you might just de-emphasize that naturally through sort of the way projects flow? And just any comment on how you view the portfolio today? I like our portfolio.

I feel at the moment, Sabah, and I've mentioned it in the past and I'll mention it again, in excess of 90% of our profits are generated in OECD countries and our strategy hasn't changed. So if I had an opportunity to grow our presence in continental Europe, I would. This is a great place to do business. In the U.S., we are subscale in many parts of the U.S. and in many sectors, so you should expect us to continue to focus on our U.S. business. There's room for us to grow in Australia. There's room for us to grow in New Zealand and even Canada, where we have, I'd like to think, the leading presence. I feel there's ample room for us to continue to grow. So expect us to not de-emphasize the markets that we're in. Obviously when a country or region is going through a rougher patch, just in relative terms, obviously the region is having a lesser presence than perhaps the others that are growing. But other than that, I think that's where we stand. We really like our footprint at the moment, and we intend to pursue in that direction.

Okay, and then just one last quick one. There was some discussion earlier around just some of the seasonality in Q4 with extra day, and you haven't noticed any slowdown in the U.S., but I guess just in terms of Q3 versus Q4, do you typically see an election year where maybe things pause a little bit in Q3 or a little bit in Q4 along the time of the election? Just thinking... if we should consider that for our models when we think about age two in terms of shift between those two quarters at all. I would not.

I would keep the same seasonality that we've highlighted in our outlook in February. Great.

Thanks very much. Thank you.

Thank you. We'll take our next question. And this is from Ian Gillies from Stiefel. Please go ahead.

Morning, everyone. Morning.

As it pertains to the earth and environmental business, and it's obviously been what I believe to be an above-average grower over the last number of years on an organic basis, are you seeing anything coming down the pipe that would cause that narrative to change or any headwinds in that business at the moment?

No, not at this point. Obviously, you know, what do I? Clearly, we're not aware of anything at this point that would change that in the immediate terms, obviously, Ian. But actually, I feel that if everything remains the same, we should do better going forward because the integration of a firm of 6,000, 7,000 people like Woody and I combined with an integration of 6,000, 7,000 people like Golder In addition to all the tuck-ins that we completed in recent years, that required a lot of work from an integration point of view. And that can oftentimes distract our operation from being outward focused and perhaps being a bit more inward focused. So if any, now that we're past that, I'm feeling, assuming everything stays the same, I'm feeling very good about the sector.

No, that's helpful, and maybe just drilling down into that division a little bit, I'm just curious whether you've seen any step change in demand or any change in how you're trying to position for PFAS work in the U.S., because that seems to be topical still.

It's the flavor of the day, I'm not going to lie, and we have won many awards. Obviously, most of our work in that regard is with the Department of Defense, And in recent months, we have secured many awards. So I think we're forging ahead on that front. And I feel we have excellent capabilities in that regard to really forge ahead and take a leadership position.

That's helpful. And then if I could sneak in one last quick one, just based on the prior question. In previous calls, I think you had mentioned on wanting to add capacity in the U.S. and geographically, I think it was specifically Texas and Florida. Would that still hold true today, or is there new regional geographies in the U.S. that we should be thinking about as well?

Look, historically, given our footprint and the acquisition that we completed, we've always been perhaps... had a larger presence or a more important presence in the Northeast. And I would say in the last five, six, seven years, we've grown organically in a very significant way out West. But if I had to guess, I think if you look at the Midwest and the Midwest of the United States, I feel we're subscale. I talked about the southern states in a number of occasions. I feel we're subscale. And clearly, California on its own, it's a country. So we could double in size and not have a problem. So the reality is I think we have a lot of room to maneuver, perhaps with the exception of the Northeast where we have a larger presence and we're feeling good about the platform that we have.

Thank you very much. That's helpful detail. I'll turn the call back over. Thank you.

Thank you. And I'll now hand the conference back to the speakers for any closing remarks. Thank you.

Well, thank you for attending the call today. Thank you for all your great questions, and we look forward to updating you as we embark into our second half of this year and look forward to updating you on our plans going forward. Thank you very much, and I wish you a great day.

Thank you. This concludes today's conference. Thank you for participating and you may now disconnect.