Earnings Call: Q1 2021

May 12, 2021

Good morning, ladies and gentlemen. Welcome to WSP's 2021 First Quarter Results Conference Call. I would now like to turn the meeting over to Quentin Weber, Good morning. We hope that you're all safe and doing well. Thank you for taking the time to join the call, during which we will be discussing our 2021 Q1 performance, followed by a Q and A session. With us today are Alexandre Leureux, our President and CEO and Alain Michaud, our CFO. Please note that this call is also accessible on our website, IITA Webcast. During the call, we will be making some forward looking statements and actual results ability to update or revise forward looking information even if new information becomes available. Relevant factors that could cause actual results To differ materially from those forward looking statements are listed in our most recent management discussion and analysis. Also, during the call, We may refer to certain non IFRS measures. These measures are defined in our management discussion and analysis of the Q1 of 2021, which can be found on SEDAR and our website. Our MD and A also includes reconciliations of non IFRS measures to the most directly comparable IFRS measures. Management believes that these non adverse measures provide useful information to investors regarding the corporation's financial condition results of our patient as they provide additional key 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 as reported by other issuers and accordingly may not be comparable. These measures should not be viewed as a substitute for the related financial information prepared in accordance with IFRS. With that, I will now turn the call over to Alexandre. Thank you, Quentin, and good morning, everyone. I'm very pleased with our performance in the Q1 of 2021. And before going any further, I would like to highlight The following three points. 1st, net revenues for the quarter were aligned to expectations. For comparison purposes, If we exclude the impact of 2 less billable days in the quarter than the corresponding period in 2020, organic contraction would have stood at 2.2 percent. With our healthy backlog and strong project pipeline, we anticipate a return to organic growth for Q2. 2nd, even though we started the year with a reduced headcount, we managed to keep our productivity levels high, allowing us to deliver an improved margin profile. And third, the quarter delivered a very robust cash flow profile exceeding our expectations. This can only be characterized as a solid start of the year, which is attributable to the action taken in 2020. So WSP could come out of this pandemic in an equally strong, if not stronger position. I would like now to turn to how we exemplify this resilience as an organization since the onset of 2021. Although some of our offices have started to reopen in accordance with government directives and regional guidelines on capacity, Most of our workforce continues to work remotely. We continue to monitor the situation closely across each region And most recently, with specific attention to operation in India, which is currently battling a difficult second wave. With the fluidity of the COVID-nineteen environment, we do expect to see an increase in office utilization by the end of summer For the regions where vaccinations have been widely administered. Separately, just a little over a month ago, We took a major step towards the realization of our 2019 2021 strategic ambitions, including the significant diversification of our platform with the closing of the Golder acquisition. This transaction has allowed us to add another transformative milestone to our history as a global workforce of 54,000 employees and have embarked on our collective journey as the leading global environmental consulting firm in the industry, led by a contingent of 14,000 environmental experts dedicated to advance the world's green transition. Since the announcement back in December, we have been eager to start collaborating in order to win work. WSPIN Golders leadership teams have been working together since the beginning of the year to build the foundation necessary to ensure Once we close the transaction, we would be in a position to unlock the full potential of our increased scale And broader, deeper range of solution to tackle key environmental and ESG challenges around the world. We are already seeing the benefits of our combined forces. Today, I am pleased to report that we currently have over 150 opportunities, which we are pursuing together in addition to 22 project awards in 7 countries from recently initiated collaborations. As can be expected this early on, most of these collaborations have occurred across our Earth and Environment teams. As we progress through integration, we expect revenue synergies in our transportation infrastructure and property and buildings end market to grow as a new large project kickoff. Golder has also seen a good start to the year in Q1 delivering as expected. We are cautiously optimistic that Golder will deliver better results in 2021 than what was initially communicated. This positive start reaffirms our expectation that the addition of Golder will contribute to both strategic growth and value creation for many years to come. As the leading global environmental consulting firm, now more than ever before, our experts are ideally ideally, I'm sorry, On April 20, we announced ambitious climate action through a commitment to achieve net zero emissions Gas Emissions Reduction Targets Approved by the Science Based Target Initiatives, the SBTI. These commitments supersede our previous targets, increasing the level of our ambitions and further aligning WSP with the most ambitious aim of the Paris Agreement, which is to limit global temperature rise to 1.5 degrees Celsius. Through our net zero commitment, we also joined the race to 0, which brings together a coalition of leading net zero initiatives with an objective to build momentum around the shift to a decarbonized economy ahead of the 26 UN Climate Change Conference of the Parties taking place this November. We are pleased to join organization across the world in leading the way on urgently tackling Climate change with our future ready approach at the center of the support. Not only are our experts well equipped to understand and adapt To the world's changing needs by advising on and delivering sustainable and resilient solutions, but our operational excellence create Now more than ever momentum around the decarbonization of the built environment. To close the loop on M and A activity since the announcement of Golden December, we completed 3 other strategic acquisitions, adding 500 people to our U. S. Operations. KW Mission Critical Engineering, TK1SC and Ercon have brought new client relationship, market leading positions and an increased geographic footprint in the United States. More specifically, KW Machine Critical Engineering with its 175 employees expands our building sector capabilities And the high growth data center, health care and science and technology markets in the United States, while also significantly increasing our presence on the West Coast. Tk1 SCA leading 240 employee mechanical, electrical and plumbing engineering from based in Irvine, California also reinforced our U. S. Property and building business in the healthcare, Science and Technology Markets. We have been committed to growing these complex markets for several years, resulting in our position as the largest engineering firm in the state serving health care clients and the 2nd largest in laboratory facilities. I think TK1SC solidifies our leadership in both these markets, while adding KW mission critical will place us in the top 5 engineering firms serving data center clients. Lastly, her consulting group referred to as our capabilities in strategic environmental engineering and consulting services whilst further extending our geographic presence in Southeastern United States. Our clients will now have access to ERCON's proprietary groundwater plume analytics tools, to better understand groundwater plant behavior. We also recently announced the acquisition of B plus B Based in Zurich, Switzerland with additional offices across the country. This 100 employee engineering and consulting firm primarily offers Project and construction management and cost management services to both public and private sector clients, increasing our strategic advisory services expertise and presence in Switzerland. Having partnered on numerous bids and successful projects over the years, We are confident that our complementary offering and competencies in the property and buildings and industry sectors positioning WSP to access a wider client base across an expanded national footprint. Now that we have covered the increased diversification to our platform, I would like to turn to the increased diversification of our capital structure With the closing of our inaugural bond offering of €500,000,000 senior unsecured notes in April. The strong investment grade credit rating obtained through this offering is another indication of the resilience of our organization I would now like to highlight a few of the major wins during Q1, starting with the reconstruction of the I-eighty in Illinois, United States as part of a 60 mile corridor wide reconstruction to provide an improved transportation system. This project will improve regional and local traffic flow, improve roadway conditions, improve bridge crossings and ultimately improve safety for all users. Moving to the United Kingdom, we are increasing our involvement on High Speed 2 With the new scope award delivering Category 3 checks for the Phase 1 Norton section, the scope covers 7 viaducts, 22 bridges, 2 flyovers, 14 culverts, various cutting and embankments and retaining structures in the Bramford tunnel. In summary, I am very pleased with our start to the year. We continue to demonstrate the resilience of our organization as we remain true to the guiding prints To our guiding principles, while not only attaining significant milestones in WSP's history, but also delivering strong results in an incredibly challenging and ever changing environment. Alain will now review our financial results in more detail. Alain, over to you. Thanks, Alex, and good morning, everyone. I'm pleased to report on our results for the quarter. We're off to a good start for 2021 with strong fundamentals on our key metrics across the organization. Starting with our top line, for the Q1, we're reporting revenues and net revenues of $2,100,000,000 And $1,700,000,000 These results are in line with our expectations, considering our reduced workforce versus last year. In addition, the impact of having 2 less billable days in the Q1 of 2021 versus the Q1 of 2020 explains approximately half of the organic contraction of 4.5% that we've experienced in Q1. Adjusted for the number of billable days to bring everything on a like to like basis and considering acquisition growth, net revenues were essentially flat compared to Q1 2020, which was for the most part a non COVID quarter. Moving to profitability. Adjusted EBITDA for the quarter was $241,000,000 up 10.3% compared to $218,000,000 in 2020. Adjusted EBITDA margin for Q1 2021 increased to 14.4% compared to 12.6% in 2020. The significant improvement in EBITDA margin is mainly attributable to improve productivity across the regions resulting from better utilization. During the Q1 of 2021, WSP received government subsidies totaling $8,100,000 which were offset by additional employee compensation, thereby bearing no impact on adjusted EBITDA. Our adjusted net earnings for Q1 2021 was 94,000,000 Or $0.83 per share, up $31,000,000 compared to Q1 2020. The increase in these metrics Our definition of adjusted net earnings effective January 1, 2021, which now also excludes amortization of intangible assets related 2 acquisition. This is especially relevant given the impact of the Golar transaction. Under the previous definition, adjusted net earnings Q1 2021 would have been $84,000,000 or $0.74 per share, which is above current market consensus Operating activities for Q1 2021 amounted to $163,000,000 compared to $3,000,000 in 2020. On a free cash flow basis, we generated $85,000,000 in Q1 2020 compared to negative free cash For the trailing 12 months ended March 2021, free cash flow amounted to $911,000,000 representing 2.6 times our net earnings. Days sales outstanding or DSO at the end of March 2021 stood at a very good level of 68 days compared to 77 days at the end of March 2020. As of the end of Q1, our balance sheet remained strong with a net debt position of $182,000,000 and a net debt to adjusted EBITDA ratio of 0.2. Of interest following the closing of the Goldar acquisition early April, Net debt to adjusted EBITDA ratio is approximately 1.2. To build on Alex's commentary, we're very proud of our successful inaugural 7 year bond issuance of $500,000,000 which has received solid demand from investors. The strong investment grade rating issued concurrently with the offering is further indication of the strain of our resilient and diversified platform. The objective of this offering was to diversify our debt structure, extend our average maturity and benefit from attractive interest rate. During the quarter, we also declared a dividend of $0.375 per share for shareholders on record as of March 31, 2021, The net cash outlay was $21,700,000 As we now look ahead, we anticipate a gradual return into growth territory and expect to report low single digit organic growth for Q2. Overall, our backlog is healthy and our pipeline continues to show strong momentum, Seeing the positive trends across our region, we remain vigilant on the uncertainty brought forward by the fluidity of this pandemic landscape. Lastly, for modeling purposes, we anticipate the quarterly amortization of intangible assets related to acquisition to be in the $20,000,000 to $25,000,000 range. Additionally, as we closed the private placement related to the Golar acquisition, we issued an aggregate of approximately 3,300,000 additional common shares on April 7, which will affect per share metrics calculation And bringing our total common shares outstanding to approximately 117,300,000. This concludes my remark. On that, back to you, Alex. Thank you, Alain. Starting the year with a 5.8 percent reduction in headcount and 2 less billable days, we were nonetheless able to keep our productivity level high, allowing us to deliver strong margin. Lastly, given our performance to date, our strong balance sheet, The positive momentum in our key markets with high levels of proposal activity, a strong project pipeline In addition to increased infrastructure spend around the globe supported by substantial monetary and fiscal policy stimulus, We are cautiously optimistic that we will return to growth in Q2 and are therefore reiterating our outlook. This overall, we believe this position us favorably to achieve our 2019 2021 strategic ambitions, Notwithstanding these unprecedented times. I would now like to open the line for questions. Your first question comes from the line of Jacob Bout of CIBC. Please go ahead. Your line is open. Hi, good morning. Hello, Jacob. The rapid rise in material costs that we've seen, is this impacting your client behavior? And are you seeing any clients looking to push out or modify top time of your projects? No. I'd say that and I think this is When you look at our productivity levels in the Q1, I think it's a testament that our people are quite busy at the moment And proposal activity level is strong. We have now seen we have a good hard backlog. We see a soft backlog going up. So I think all in all, I don't see any trends to push Later in the year, the work essentially. Okay. And then how about labor cost inflation? Are you seeing any of that? And are you baking any of that into your guidance for the year? Look, of course, this is I know that we haven't talked about inflation in a long, long time. And Of course, it's something that we're going to be monitoring in the future. But as of now, of course, I think our biggest focus right now is to recruit and recruit talent and really make sure that we get to the level of headcount that we need To get to deliver the year and essentially translate this backlog into revenue, I think that's our primary focus. But haven't seen just yet a significant change in wages, for instance. I think it's probably early to make a statement like that. Okay. Last question here just on Your comments on in the MD and A talking about the proposal activity high across the business. Are things ramping as you move through Q2 and ramping Q2 versus Q1, I guess. Well, generally speaking, Jacob, as you know, our Q1 is typically And relative terms and as a proportion to the total profit that we will be generating in any given year, The smallest quarter of the 4. So indeed, said the way you asked the question, I expect Q2 to ramp up, but we expect a return to organic growth. And typically, Q3 and Q4 are our busiest quarters. So Fingers crossed, it's still early in the year. But looking at the trajectory, looking at our backlog, looking at our Proposal activity level, I think we're feeling good about the start of the year at the moment. Is ramps tied to vaccination rates? Not really. Not really. I think like any given year, as I stated before, of course, Vaccination is helpful. And of course, we are seeing the end the light at the end of the tunnel, But the ramp up is not tied to that. I think we've seen a good level of Proposal activity throughout the 2nd part of last year and early in Q1. So we're feeling good about that. Thank you very much. Thank you. Your next question comes from Jean Francois Lavoie of Desjardins Capital Markets. Thank you. So I appreciate the color you provided about the cross selling opportunities between your legacy business and Goldar. But I was just wondering, I know it's still early in the integration process, but I was just wondering if you could talk or quantify the potential revenue Synergies that could be extracted from this transformative acquisition. Yes. Jean Francois, this is a very hard one to answer. It's quite hard to predict the synergistic benefits of the deal. And moreover, You need to combine that with supply demand dynamics in the marketplace. You need to also look at The client base and try to determine the growth that this client base will want to give you. So I think it's almost impossible to quantify the revenue synergies. Having said all that, in the coming quarters, I will try to provide you with some color and anecdotal evidence that This deal is a great deal for the company, a bit like we've done in any of our previous deals in the past. I think to provide you with a bit Color and win and give you a few examples on our wins together, I think we'll give you perhaps A flavor for what this deal means for WSP. But without a doubt, with We're currently right now pursuing 150 opportunities together. And we're feeling good already that the team And it's early days. Obviously, we closed in March. It's early days, but we're I feel that Both teams are quite positive around the prospect of lending together. Thank you very much And then shifting to M and A, you have been you continue to be very active with tuck ins acquisition, especially in the U. S. So I was just wondering if you see further opportunities in the country as you Ahead of the potential U. S. Infrastructure build that might be coming up later this year. Again, it's hard to time acquisition. I think I've said it in a number of occasions in the past. Very hard, but we remain very active since the announcement of UPCOlder and will continue to be. In the right circumstances, of course, I'd like to do more. This is part of our DNA. And I see some opportunities to do more. So we'll see how things will pan out. But certainly, looking at the strength of our balance sheet And the start of the year, if there are some opportunities for us to do more tuck ins, we will for sure. Thank you very much. Congrats again. Thank you. Your next question comes from Sabahat Khan of Your next question comes from Chris Murray of HB Capital Markets. Your line is open. Thanks folks. Good morning. I was wondering if you could touch a little bit on what you're seeing in the buildings market. I know As we went through last year, there was a lot of disruption and thoughts around what proponents might be wanting to do. I'm just wondering if you've seen maybe a change in tone as we're maybe getting closer to the end of the pandemic. Yes. Well, I've been quite vocal about this last year, Chris, that there was a general I felt people were concluding a bit too quickly On the state and the health of the property and building markets, I feel that people are putting property and building market and actually any sub Yes, I had this on this over the course of the last 12 months. But then you look at our mission critical work, Data center, IE data center and the acquisition that we completed, you look at the health care sector, actually these are booming And we are doing extremely well. We see a lot of growth in those markets. So It's certainly a very important market to us and we will continue to strive and continue to grow this market. I see Tremendous opportunities in the market. And I think I also see tremendous opportunity in the commercial real estate sector as well for us to rethink and reinvent the way of working in the future and perhaps to retain and perhaps the use of some of the commercial real estate Buildings are essentially if we were to see people moving more towards an environment where they work Remotely, those buildings are not going to be teared down. What those buildings are going to be used for is to be seen, But I can assure you that they will be reutilized for other purposes. And that's where WSP can be of tremendous help and assist in reshaping the cities of tomorrow. And that's why I'm not As negative as some may have been in the past. And to the contrary, in the years to come, I see some opportunities in that sector. Okay. Just you mentioned your strong product pipeline. Have you seen any new projects either, call it, restart or new Projects come to that pipeline? Look, I have to admit I was quite surprised by the level of proposal activity in the U. K, for instance. Of course, we all know that going all the way back to end of 2019 with An election, the Brexit, the pandemic, I was looking at During H2 last year, I saw some an increased level of proposal activity and I was really wondering if this Equally in the U. S. And even Canada, I mean, we haven't touched base in Canada today, but Canada has done Very well in the quarter, and our team should be commended for the good start in Canada. And again, yet again in Canada, We do see a very active proposal activity level. So that Of course, I'm cautious, but I think this bodes well for the future. Okay. That's helpful. Thank you. And then just turning maybe to the margin in the quarter. Just thinking about you mentioned utilization, but I'm trying to maybe Frame this in the context of, is it work that's been coming faster than you can actually staff up? Or is it just Maybe something that coming from the way that you may have been working with restructuring the business over the past year as we've gone through this. And then thoughts around whether or not that kind of margin performance being driven by utilization, how far can you get on that If you really do get back to, call it, maybe mid to higher single digit organic growth levels. Look, these are all great observations, great questions, Chris. If you look into if you look at our MD and A and do the math on our reduced workforce and the work that we did in 2020 to streamline the business and get ready for, As I said to set the business up for future success and you compare this to our Reduce organic growth or reduction in our negative organic growth and you add to that the 2 last billable days. Of course, there's a limit to what you can do on utilization. I think we run really a really tight ship right now. And what I said in Q4 is, I am not worried about the backlog right now. What I am focused on And where the team is focused on is really to get people to join WSP. And that's the focus. If we want to be able to deliver the backlog and deliver the growth, we need to hire people. It's a great problem to have. So as I stated before, I'm not concerned about the work. What I want is to make sure that the team is focused on hiring And getting people in the door so that we can deliver in time and on budget. So it's a bit of a different Problem a good problem to have than perhaps what we had seen at the end of the last crisis where the work was The backlog got dried up essentially. Yes. All right. Thank you very much for your time. Thank you. Your next question comes from Michael Truffaut of TD Securities. Your line is open. Thank you. Good morning. Hello, Michael. Alex, in your prepared remarks, I think I heard you mention that you expect Golder's Contribution to WSP's 2021 results to be better than originally expected. I'm wondering if you can provide some additional details On that comment, including which areas are coming in stronger than originally expected? Well, we started our discussion late in the summer last year. So of course, we were in the middle Right in the middle of the pandemic, Michael. And of course, when we agreed the price and negotiated the price, I was also Taking into consideration the forecast for the remainder of the year and not knowing when the end of the pandemic would come from, When the pandemic would end essentially. So of course, when you compare our due diligence forecast at the time And at the time of the announcement to where we are today, I think it's fair to say that I feel we are in a better environment. And also, had not planned for a Biden election when we did this deal. I think we were hoping for that, But nobody was planning for this. So I look at the way the world is shaping up right now around The Sun Market, Earth and Science and Earth and Environment, I'm sorry, Sciences. And I'd say that we have very good momentum right now. And if we do this right, I think that the expertise that we have with WSP combined with Golter, I think, We'll create amazing synergistic benefits. And I think this year is not any different than what I expect in the future. I think we I'm confident that we may be doing a bit better or better than what we had planned for early on When we announce it still. Okay. That's helpful. Thanks, Alex. And just maybe one follow on to that. Is the better momentum that you're seeing Right now, is that captured in the guidance range that you've given and reaffirmed last night and today? Or Does that lead you to a situation where there could be upside to that range? Well, when you provide guidance, This is more of an art and a science. At the end of the day, Michael, I think you provide a range that you believe you will hit and you Provide a range that you believe is realistic. You don't want it to be too conservative. You don't want it to be overly aggressive. So I'd say that this morning, I'm feeling let's put it this way. This morning, I'm feeling With what I know today, I'm feeling quite good about this outlook. Okay. That's helpful. A fair bit of discussion on the call thus far about the ramping up of Headcount to execute the work program that you have in front of you. Can you talk a little bit more about how we should be thinking about that headcount growth Over what period you see that happening? In what regions? If it differs at all by regions, just a little bit more color on all of that would be helpful. This is you're reading my mind. I mean, look, I'm getting a report every week on this. I'm very focused on making sure that the ramp up of our people is taking place and making sure that we attract the right talent And the business, as I stated previously, I'm not concerned right now about the work. We're running more than our share of work. I think what I want is to make sure that we convert this backlog in revenue. And in order to do that, we're going to need more people. And that's, as I stated before, a good problem to have. But nevertheless, that's something that we have To tackle, so the hiring process is very, very active. Any country you would name right now, I think it's very, very active. And we'll see where it's going to lead us, but the team is very much focused on this right now. Okay. And then just lastly, I know you've reaffirmed your full year 2021 guidance, but I'm just looking at the organic growth A portion of that guidance, 2% to 5% for the year. Any change at all in the various regions? You'd previously provided Some comments around how you expected the various segments or regions to fare in 2021. Just wondering if there's been any change there, if that's all reaffirmed. No, not at this point. It's still early days, Michael. I think it's 90 days in the year. There's a long way ahead. We'll see where how we're going to do in Q2 and this and what we're going to be required to deliver in 34 to To assess whether we think this is the right guidance at this point in time. But remember that we're minus 4.5 in the Q1. So in order to get to, let's say, 5, just do the math in 2, 3 and 4, we're going to deliver we're going to need to deliver a good quarter. So that's why I'm saying it's too early to call. And We'll monitor this very closely and then we'll have another discussion in August. Okay. Thanks very much. Thank you. Your next question comes from Devin Dodge of BMO Capital Markets. Your line is open. All right. Thank you. So Alex, culture is a big focus at WSP. It's something you spend a lot of time on. So with hiring ramping up, But we're still primarily in a work from home or at least a hybrid work environment in a lot of places. Can you talk about the approach You're taking to onboarding these new hires to ensure that the culture at WSP is maintained? Extremely good question. We're very focused on this. Of course, we didn't believe A year ago that we could do all of what we're doing now remotely and hiring is not any different. This week, I conducted interviews for the hiring of an executive at WSP, and I have done it through teams. And I think we're working this out very nicely. And I know that The accountability of recruiting the right people in the business at WSP is not with HR. It lies with our operation And with our leaders. So of course, we've developed tools and we know the skill set that we're looking for. But the way to maintain culture at WSP Devon is to make sure that our leaders are rolling up their sleeves and They know what we need and we know what a good consultant at WSP stands for. And having all of our leaders Helping and recruiting the right talent is to me the secret sauce. So I think We're doing fairly well on that front. Okay. That's good color. Thank you for that. And maybe can you comment on what You're seeing from your U. S. State and local clients and if the reopening and stimulus measures have started to translate into more projects moving ahead? It's tough to know for sure. But to your question, I would assume yes, Of course. So to be seen. Of course, we're now seeing some of our largest hubs Reopening gradually. So I think this is good news. Look, in the U. K, things are reopening gradually. I think in the U. S, we see an increased level of activity. I Canada 2, 3 months from now to be in a good position. I think anything and of Maybe 3 months from now, we may be in a much better position. With the vaccination rate going up, you're looking at the Australia doing well. Asia, Essentially, all of our folks in Asia are essentially back to work full time. So I think I'm seeing a lot of good Positive momentum and hope that government spending will follow and be in a good position. But Long story short is I believe the underlying trends in that in this industry are good and will remain solid for years to come. Okay. Thanks for that. Congrats on the good quarter. I'll turn it over. Thank you, Devin. Your next question comes from Frederic Bastien of Raymond James. Please go ahead. Your line is open. Guys, I hopped on the call late, so I apologize if you've touched on this Alrighty, but I was hoping to get more color on your pipeline of M and A opportunities. Are the targets On your wish list mainly comprised of companies that you were engaged with prior to COVID? Or have you been able actually in the last couple of months or last 12 months Engage with new companies and move forward on those. No. We I'd say, Frederic, that We've engaged many of the deals. I take B plus B in Switzerland. That's a deal that we have been in touch on for For 3 years, so this was pre COVID. But then you take Ercon that we announced late last year, this was a COVID year Discussion. So I'd say it's a mixture, but we are able to A bit like the question on the hiring process and how do you preserve culture in a remote work environment. We've developed ways of engaging with 3rd parties on the acquisition front in a different way. I've conducted A virtual tour in a number of countries during the pandemic, and I've been able to engage with companies that I had never engaged with in the past, And we'll continue to do that. So I'd say, Fred, that it's a mixture of pre COVID relationship, but also newly built relationships. Okay. And are you seeing sort of just the intensity of the level of opportunities? Is it Similar to what it may have been 2, 3 years ago? Or are you seeing accelerate or decelerate? I think M and A, Joboli is Very, very active right now, and I expect it to be very active for the next 24 months. I mean, you see the number of that have been created in the last 12 months. And I think they have $200,000,000,000 of capital to deploy in the next 24 months. You look at The health of fundraising efforts in private equity firms, I think there's a lot of capital in the system. So So I do expect a very active M and A market for the next few years And increase competition, but that's always normal when we expect a very strong GDP growth. So we'll see how it plays out, but definitely I do expect a lot of activity. Your next question comes from Dmitry Knaueck Nielnicki of Veritas. Your line is open. Hello. Good talking to you and thanks for taking my call. Can you please explain the disconnect between positive organic growth in backlog Negative organic revenue growth, what drives that? Well, it's quite simple. The backlog is a good reflection of what we may expect in the future. And the negative organic growth in the quarter is what took place in the past. And so of course, that's why the backlog is oftentimes a good trend of what we may be experiencing in the future. There's no guarantee because you need to translate this backlog into revenue. And that's why this morning I said that hiring the right People and the right number of people is very important, but that's typically the rationale behind it. And there's phasing associated with the also with the backlog. Okay. And in the past, you included sorry, you excluded amortization of intangibles In the adjusted earnings, going forward, you will be Excluding that, what was the rationale? And you were probably one of the extremely few companies that Include amortization of intangibles in adjusted earnings metric, which was extremely conservative. What was the rationale for inclusion of this amortization in the past? And why did you decide to No, I stopped doing that following Golder acquisition. Well, given the share size of the acquisition of Golder, We thought that providing you with additional color on the amortization intangible will assist you And predicting and having better comparison against companies that are not necessarily Having to deal with that type of acquisition growth, I think For you to be in a position to better compare us to our peer group, we thought that we would provide a new with that additional color. At the end of the day, I need to assist you with formalizing a better view. There's nothing more than that. Understood. Okay. Thank you. Thank you. Your next question comes from Sabahat Khan of RBC Capital Markets. Your line is open. Great. Thanks and good morning. There's been some discussion of rehiring process going forward. And I think 1 of your global peers recently indicated that as some of this infrastructure spend does pass, the U. S. Design market could grow by 15% to 20%. And presumably, all your peers will be out hiring as well. I'm just thinking, what are some of the strategies you're planning to implement to make sure that you get the right amount of people? As you indicated, that is your biggest Right now into a seat at the right time. So maybe some color on kind of how you're approaching that strategy? Look, I mean, we're making tremendous effort universities to recruit the best talent. Our brand is very important, but also engineers want to come to work For a firm that is working in the most complex and iconic projects. So taking the time to explain the expertise that we have in house And also the vision and what we intend to do in the future is something that is quite appealing to To the young workforce and more importantly, I think, taking the time to explain the working environment and the division and the ambitions that we have for the Future, I think the new working environment will be, I believe, a huge market differentiator. So that too It's something that we're keeping in mind. So look, at the end of the day, it's just to take the time to explain who we are, how we work And why we do it. And I think historically, we've been quite successful. We have a very A big ramp up exercise and that's something that we're working on right now. And then you indicated that in Asia, I know a lot of your For most of it, they have come back to the office. And I think on the last call, you indicated that you'll take a slow and steady approach to thinking how the work environment changes, if at all. Any learnings there? Are you noticing anything in that market or that you might be able to apply to North America once they're reopened? Or is this sort of things back to normal and will discontinue? I don't think it's never going to be back to normal. I think we need to forget this. I think we need to look at this differently. I think flexibility is something that is going to have to be part of our new working environment. Having said all that, In my personal opinion, to come up with a global view, global principles and guiding principle around what's our WSP, what's our view? It's our view of the working environment of the future. You've seen banks making some announcements and so this is our view. You saw JPMorgan and Goldman Sachs and you saw The tech world applying their own visions on what they think life will look like. We are going to do the same thing for All I am saying is, I believe the answers will come naturally. And with the benefit of time, we will really get Exactly what our people are looking for. And what I said is before announcing that we're going to cut our real estate by 30%, 40% and make all sorts of announcement, I believe that from a cultural point of view, I need to hear from our people and Do what's right for the business in the longer term and what's right for the younger generation. At the end of the day, that's They are the leaders of the future. So just need to take the time to assess what's right for For our environment, what's right for our industry, what's right for our business. And what I said in the past is we need the benefit of time to assess what And when the time is right, we'll make an announcement. And I agree that it's going to have to be made sooner rather than later. So we're working on it right now. Great. And then just one last one for me, I guess. One of the things your industry has had to do and yourself is identify where the puck is going in terms of end markets. The water and environment have been quite active in growing areas. If you look forward beyond the pandemic, which end markets are you preparing to grow and where do you see the opportunity over the Yes. I have an idea. I'm not going to lie, but we are working on rolling up our next Strategic cycle and putting together our next strategic plan. We actually officially kicked off that process last week With our team members. So we're going to take the time to gather our thoughts around this, take the time to reflect During 2021 on where we want to take the business forward and when the time is right and when we unveil our next plan, That's when I believe I should be making this announcement. Great. Thanks. Not that I don't want to talk about it today, but we We just need a bit of time to gather our thoughts, take the time to reflect. And I don't mean to be abrupt in any way. I'm just saying that We're going to be unveiling our plan early next year. And right now, I think we should be focused on delivering what we have And take the time to decide where we want to grow next. Okay. That makes sense. Appreciate the color. Thank you. There are no further questions at this time. I'll turn the call back over to the presenters for closing remarks. Well, thank you, everyone, for attending this call this morning. We look forward to updating you in Q2. Thank you for your support. And if we can answer any question offline, please do not hesitate to reach out. Thank you very much, and have a great day. And this concludes today's conference call. Thank you for participating. You may now disconnect.