WSP Global (TSX:WSP) Q3 2026 Earnings Call

0:00 Good day and thank you for standing by. Welcome to the WSP Global Inc. third quarter 2026 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please note that today's conference is being recorded. I would now like to have the conference over to your first speaker, Quentin Weber, Head of Investor Relations. Please go ahead.

0:38 Thank you. Good day, everyone. We will discuss our Q3 2020 results and performance today, followed by a Q&A session. Alexandre L'Heureux, our President and CEO, and Alain Michaud, our CFO, are joining us this morning. Note that this call is also accessible via webcast on our website. During the call, we may 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 in the forward-looking statements are listed in the MD&A for the quarter ended September 25th, 2026, and the financial year ended December 31st, 2025, which can be found on CDARplus and on our website. In addition, during the call, we may refer to specific non-IFRS financial measures.

1:31 These measures are defined in our MD&A for the quarter ended September 25th, 2026. Our MD&A includes reconciliations of non-IFRS financial measures to the most directly comparable IFRS measures. Management believes that these non-IFRS measures and other financial measures provide useful information to investors regarding the corporation's financial conditions and results of operation, 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 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 in accordance with IFRS. With that, I will now turn the call over to Alexandre.

2:25 Thank you Quentin and thank you all for joining us this morning. Let me start by saying that we are pleased with our third quarter results which continue to demonstrate the strength of our diversified platform. We delivered a strong third quarter with growth across all reportable segments, continued margin expansion, record backlog and solid cash generation. Our quarterly results came in line with our quarterly outlook ranges and our key financial measures. Net revenues, adjusted EBITDA and margin, adjusted net earnings, backlog and free cash flow all improved year over year. The fundamentals that fuel our business are sound and our positioning across our end markets and regions is strong.

3:17 Let me highlight four points for the quarter. First, Net revenue increased 22% year-over-year, including 5.1% organic growth. This was led by double-digit organic growth in the UK and Canada, and a more measured pace of project conversion in the Americas, and the second consecutive quarter of organic growth in APAC. This was our strongest quarter of organic growth since Q4 2024, and our second consecutive quarter above 5%. Backlog reached another record level of $20.3 billion at quarter end, up 23.5% over the last 12 months, and representing 11.6 months of revenue. For a second quarter in a row, organic backlog grew at or above 5% over the same period last year, led by the US, the UK, and Australia.

4:16 In the Americas, year-over-year organic backlog growth improved sequentially from negative 1.4 in Q1 to 2.1 in Q2 and 4.9% in Q3. Third, adjusted EBITDA grew 23.4% and adjusted EBITDA margin expanded 30 basis points to 20.5%, mainly driven by strong margins in the US and Canada. Year-to-date adjusted EBITDA margin stands at 18.9%, up 70 basis point, reflecting our continued and disciplined focus on productivity and margin improvement. Fourth, our power and energy platform continues to scale.

5:01 TRC's power and energy market sector delivered double-digit net revenue growth in the first nine months of 2026, and the integration is progressing as planned. More than 100 Joint Pursuit are already demonstrating the strength of our combined offering. Before turning to our regions, let me step back and explain what these results tell us about WSP positioning. We are in the early stages of a generational investment cycle. Grid expansion, energy capacity, defense, nuclear, water, critical minerals, and digital infrastructure are reshaping our clients' capital plans. These markets increasingly require scale, technical depth, and an integrated offering from planning to delivery. WSP is exceptionally well positioned for this shift.

5:53 Our results this quarter reinforce three points. Execution remains strong, our diversified portfolio is performing as designed, and our addressable opportunity continues to expand, and the power of diversification both geographically and By-End Markets is creating a resilient environment for WSB. With that context, let me turn to the regions and focus on the development that matter most. Starting with Canada, we delivered an excellent quarter with organic growth of 10.2%. P&I or Transport and Infrastructure performed strongly and momentum continued to build across energy, mining, defense and data centers.

6:38 We remain involved in 68 of the country's 100 largest public sector infrastructure projects, more than any company in the industry. The acquisition of GCM Corp will further strengthen our energy and industrial capabilities. Looking ahead, demand remains healthy across transportation, defense, data center, water, aviation, energy, and municipal infrastructure with additional opportunity from the federal push to accelerate nation-building projects. Canada's quarterly growth also benefited from the timing of certain project milestones. We do not extrapolate any single milestone into future quarters. What gives us confidence is the breadth of demand across transportation, power, mining, defense, data centers, and municipal infrastructure together with a strong pipeline of nation-building programs.

7:36 Turning to the Americas, Our view of the underlying demand in the U.S. has not changed, but our view of the pace of conversion has. Since our second quarter results, we have longer timeframes between project award, funding authorization, and the start of work in parts of our public sector transportation infrastructure and earth environmental market sectors. Federal funding reviews in various agencies have contributed to these delays. Importantly, demand remains strong. Year-over-year organic backlog growth improves sequentially through 2026 to reach approximately 5% in Q3. Backlog covers over 12 months of revenue, while our transport and infrastructure backlog represents 13 months of revenue and a 1.2 book-to-bill ratio, demonstrating continued award activity.

8:34 As we add into 2027, We are closely monitoring funding authorizations and client mobilizations, as well as developments following this week's midterm elections. The U.S. is not one market moving in one direction. Core highway funding remains comparatively well supported, and streamlined federal permitting should, over time, move projects more quickly into engineering, design, program management, and construction support. At the same time, the structural drivers in power and energy continue to strengthen, fueled by electrification, energy capacity, and the need to modernize aging grids.

9:19 Our recent selection by American Electric Power as a delivery partner for its Western regulator transmission portfolio is a clear example of how major utilities are securing engineering and program management capacity to deliver significantly expanded capital plans. This is an important strategic win for our U.S. business and demonstrates the type of long-duration client relationship we believe our expanded power and energy platform can increasingly capture. On data center, we are closely monitoring the pace and location of capacity additions, but we do not view our power and energy opportunity as dependent on a single end market.

10:06 Utility capital plans are being driven by low growth from multiple sources. Grid reliability, electrification, aging infrastructure, and the need for new generation and transmission. Power Engineer and TRC are growing at a double-digit pace year-to-date. Integration remains on track, and the more than 100 joint pursuits give us increasing confidence in the revenue and synergy opportunity in 2027. To sum it up, our view of the US opportunity has not changed. Our view of the timing has. With a backlog of 11 billion, up 5% organically year over year, the work is there. What we are managing is the pace at which it converts and the pace of improvement will depend on observable client actions.

10:57 Funding authorization, task order releases, project mobilization and utilization. Based on what we see today, we expect the recovery to be gradual rather than linear. The sequential improvement in backlog support our confidence in the opportunity, but we will remain disciplined on the timing we built into 2027. In Latin America, our mining business is performing well, supported in part by strong demand for copper. Turning to EMEA, organic growth reached 10.5% and Baxa grew by almost 12% organically over the last 12 months. The UK delivered its fifth consecutive quarter of double-digit organic growth supported by TNI, power and energy and data centres.

11:47 We're also expanding in defence and nuclear while the M8 investment is expected to support increased water activity. The acquisition of Holley and Kirkwood further strengthens our building services capabilities. In Central Europe, conditions remain healthy with selective strength in data centers, industry, energy, and defense. And turning to the Middle East, we continue to perform in line with expectations with transportation infrastructure and property and building both delivering double-digit organic growth in the quarter. We secured work with key clients, notably the modernization of King Fed International Airport and Daman. The evolving geopolitical situation has however prompted governments to review spending priorities and adopt a more considered approach to the timing of new project awards. We are therefore taking a prudent near-term view of the region, focusing on converting priority pursuits expanding into new sectors and maintaining our strategic and commercial discipline.

12:57 Finally, APAC delivered organic growth for a second consecutive quarter. Australia has healthy momentum supported by property and building and major transport programs and the acquisition of E2M expands our ecology and approvals capabilities. In New Zealand, lower public spending continues to weight on activity and we are taking actions to deliver sound results in the current environment. APAC margins was lower year-over-year principally reflecting the regional mix and foreign exchange edging effects together with continued softness in New Zealand. We are addressing these elements within our control, including the cost base, utilization and project execution, while protecting the capabilities needed to benefit when activity improves in New Zealand. With that, I'll turn it over to Alain, who will walk you through our financial results.

13:57 Thank you, Alex, and hello, everyone. I'm pleased to report on our financial results for the quarter this morning. Let's start with growth. In the third quarter, revenues increased 16.6% year-over-year to $5.3 billion, while net revenue increased 22% to $4.23 billion within our quarterly outlook range. Net revenue organic growth reached 5.1% with all reportable segments contributing. Acquisition growth was solid at 15%, mainly attributable to TRC and Ricardo. Canada and the UK led this performance, both delivering double-digit organic growth. APAC delivered organic growth for the second quarter in a row, and TRC's power and energy market sector achieved double-digit net revenue growth in the first nine months of 2026.

14:48 Backlog reached a new record level of $20.3 billion as of the end of September, up almost 24% over the last 12 months and representing 11.6 months of revenue. Organic growth was at or above 5% over the same period, marking the second consecutive quarter of backlog organic growth at or above 5%, while the Americas have shown sequential increases in year-over-year organic growth throughout 2026. Moving on to profitability, adjusted EBITDA in the quarter grew to $865 million compared to $700 million in the third quarter of 2025. and increase of 23% in line with management's quarterly outlook range.

15:35 Adjusted EBITDA margin for the quarter increased 30 basis point to 20.5% compared to 20.2% in the third quarter of 25. The improvement was mainly driven by strong margins in the US and Canada. For the first nine months, adjusted EBITDA grew 23.3% to $2.3 billion and margin expanded by 70 basis points. The year-to-date margin improvement reflects a combination of stronger regional operating performance, productivity, and cost discipline, as well as favorable foreign exchange. We are very pleased with the margin outcome. Adjusted net earnings for the quarter reached $431 million or $3.22 per share, up by $62 million or $0.38 per share compared to the third quarter of 2025.

16:29 The increase is mainly attributable to higher adjusted EBITDA, partially offset by higher interest on long-term debt following the issuance of senior non-secure notes in the first quarter. Net earnings attributable to shareholders were $334 million, or $2.48 per share, compared to $285 million, or $2.18 per share last year. As for our cash position, cash inflows from operating activities were were $496 million in the quarter, up from $440 million, and free cash flow was $333 million compared to $315 million in the third quarter of 25. Free cash flow for the nine-month period ended at the end of September stood at $588 million, and the trailing 12-month free cash flow amounted to $1.41 billion, representing 1.4 times net earning attributable to shareholder.

17:31 DSO as of the end of September stood up at 73 days compared to 71 days at the same time last year and our leverage ratio stood at 2.2 times at quarter end slightly above our target range following the TRC acquisition. We remain on track to return to our target range by year end supported by earning growth and cash generation. Our capital allocation remains Priorities remain unchanged, which is to fund organic growth, integrate our recent acquisition, return leverage to our target range, and preserve flexibility for disciplined value-creating opportunities. Turning to our 26th outlook. The financial outlook issued in February 25th, 2026 and revised on May 6th and August 5th, 2026 is reiterated, except for net revenue and adjusted EBITDA which we are narrowing to between $16.3 billion and $16.65 billion and between $3.11 billion and $3.15 billion respectively.

18:37 As mentioned last quarter, given the progress achieved today, we're not comfortable that we will reach our 2027 adjusted EBITDA margin target of 19% in 26. Reaching our target early gives us flexibility in 27 to invest selectively in talent and capabilities that support sustainable growth while maintaining strong operating discipline. For Q4 26, we expect net revenue to range from $4.1 billion to $4.45 billion and adjusted EBITDA to range from $810 to $850 million. Our outlook now assume low single-digit organic growth and net revenue for the Americas reportable segment and upgraded mid to high single-digit organic growth for AMIA. In the U.S., project conversion is progressing at a more measured pace than anticipated. Importantly, backlog and award activity remain healthy, reinforcing our view that this is primarily a timing issue.

19:36 Contribution for emergency response services in the Americas is expected to be below the historical average in the fourth quarter, given the muted hurricane season in the U.S. In APAC, we expect reduced public investment in New Zealand to continue to temper activity levels. We will not be providing 2027 guidance today. At this stage, the key building blocks are clear. Healthy backlog and structural demand in power and energy and other priority sectors, continued strain in Canada and AMIA, and a gradual rather than immediate improvement in the U.S. project conversion. We will provide our formal outlook with our year-end results based on the visibility available at that time. I would like to remind you that this outlook is intended to help analysts and shareholders refine their perspective on our performance, and using this information for other purposes may be inappropriate. Actual results may differ, and such differences may be material. Our outlook assumes foreign exchange rates, inflation, interest rate, and effective income tax rate will remain consistent throughout 2024-2026.

20:40 Also, our selected financial outlook does not include any dispositions, merger, business combination, or other transactions that may be announced or completed after today. With three-quarters now behind us, our results, organic growth across all segments, continued margin expansion, a record backlog, and a solid cash generation puts us on a strong footing to close out 2026. With that, back to you, Alex.

21:08 Thank you, Alain. Let me close by bringing the quarter back to the broader investment thesis. The generational investment cycle I described earlier continues to broaden across our markets. Clients are committing capital to larger, more complex, and increasingly interconnected programs. Grid expansion, energy capacity, defense, nuclear, water, critical minerals, and digital infrastructure are changing both the scale of our clients' capital plans and what they need from their advisors. And we continue to strengthen this platform. More recently with the GCM acquisition in Canada, Hurley and Kirkwood in the UK and E2M in Australia.

21:53 Our priorities remain straightforward. Convert our record backlog into profitable growth, generate strong cash flow and maintain financial discipline. At the same time, the opportunity in front of us is expanding. The world's infrastructure needs are becoming larger, more complex, and more interconnected, precisely the environment in which WSP scale, technical depth, and global platform create the greatest value. With that, we will now open the line for questions. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Once again, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

22:45 We are now going to proceed with our first question. And the questions come from the line of Sabahat Khan from RBC Capital Markets. Please ask your question.

22:55 Thanks, Sam. Good morning, everyone. Maybe just starting with kind of the overall demand outlook commentary, Alex, that I think you shared around the U.S. I think you referenced some delays in project conversion. Backlog growth has been good. Can you just maybe detail kind of the conversations you're having with some of these clients? Is it they added a project to the backlog? Tariffs got put in place. We've been hearing some commentary about public funding in the U.S. not being good. What are kind of the things that they're looking for? I think you mentioned the recovery will be gradual, but just can you share some of the milestones or items that we should be keeping an eye on and that you're discussing with your customers, primarily from the U.S. market? Thanks.

23:36 Yeah. Well, first of all, let me start by saying what I said early on. Our view of the U.S. market has not changed as the timing of it. That is slightly moving to the right. At the moment, what we're seeing is proposal activity level very strong, backlog growth. You saw the sequential increase in our U.S. business has gone from minus 1% to 2.5% to 5% now. So the backlog is growing and there's a lot of activity in the pipeline for WSP. But the funding and accessing the funding of it has been slightly more challenging for clients.

24:28 So getting the notice to proceed from our clients has been what has caused the delays, especially, and not everywhere, but especially in public work, so in transportation infrastructure, and in the portion of our earth environment business related to transportation. The funding from the federal government to the states and the local has been delayed in some instances. And obviously, hopefully, the December 11 timeline that will hopefully be extended by the existing Congress to the new Congress on January 3rd will unlock some of that. But that's what we have seen in the second half of this year.

25:24 So as I said, a very, very strong market, backlogs growing, but accessing the funding has been causing or there's been some delays in some part of our U.S. business.

25:41 Great. And then just a second question, I guess, on the margin side, I'm not trying to front run the 27 guidance, but Alain, I think you mentioned sort of to think about the overall Algo being largely intact you know are there any sort of at least just you know don't need to get numerical but any building blocks on the 27 margin outlook I think you know TRC contributed for a good chunk of the year but any other sort of big picture items on margin drivers that we should think into 2027 as sort of the you know the demand environment evolves thanks currently working on it Sabah budget season is going full stream so

26:15 As you said, I will refrain from giving you color on 27. What I could tell you, though, is we're now very comfortable with our margin trajectory for 26. We will reach a full year in advance our 27 target. So that's more than 100 basis points in two years that we will have delivered with what you could call maybe a different operational leverage than we would have thought with lower growth. But despite all of that, We delivered strong margin and we're very proud of that. It's part of our DNA, as you know, so we'll take that into consideration as we look into 2027. Great. Thank you. We are now going to proceed with our next question.

27:04 And the questions come from the line of Steven Seesha from EBS. Please ask your question.

27:11 Thanks. Good morning. Congrats on the solid results. I want to talk about Canada a little bit. The Canadian backlog growth year-over-year had a pretty big swing from Q2 to Q3. And I guess I'm just curious what you think the underlying trend there is. I know backlog can be a little lumpy, so just curious given that swing. And maybe related to this, the follow-on from the Canadian Investment Summit last month, curious, What sort of opportunities do you think could be presented there and what timeframe?

27:47 Yeah, well, I think you mentioned that backlog can be lumpy and the size of the projects, and I think I've said that in my address this morning. We are dealing now with so many large programs in our portfolio at WSB. that one award can significantly shift the backlog growth from one quarter to the other. So I would refrain our investors and analysts to make determination on one quarter. I think the fact that the backlog is I think minus 1% or flat this quarter is not giving us any concern whatsoever for Canadian business.

28:35 We've had a great year. We see a great pipeline of opportunity. And commenting on the investment summit, I had the opportunity to participate in the investment summit and engage with many of the sovereign funds present at the summit. And yes, I think this is going to provide loads of opportunity in the next few years We saw a number of announcements by the federal government in recent weeks. And since the investment summit, I think this will hopefully and definitely encourage great productivity investment in the country.

29:24 But in order to be more productive as a country, you got to have a state of the art infrastructure. And I think this government is very well aware of that. So I think we're going to see tremendous investment in ports and marines. We're going to see investment in airports and roads, and in defense, and obviously in the energy sector. When we talk about data sovereignty as being a high priority for this country, I think we should be expecting a lot of investment in the energy sector. So all that to say, am I concerned about our backlog growth in this quarter? Absolutely not. We're feeling extremely good about our Canadian country, our Canadian business, sorry. And country, by the way.

30:17 Sure. Thank you. As a follow-up, going back to the U.S. here, just on the slower pace of the conversion here, curious what you think really triggered it I know you talked about it in the context of the highway bill. Was it basically kind of getting to the end point of the IIJA and seeing that deferral to December? Because it sounds like you think perhaps another extension in December will help. but I'm curious do you think is this a broad industry-wide issue for all players in this? Is there anything in particular about your particular area of exposure here and what do you think the catalyst is to get it to re-accelerate?

31:06 Is it another extension or do we really need sort of the full new build to get this moving again?

31:13 Look, since the The administration was elected in late 24. As you've seen and witnessed, there's been a lot of changes in priorities by this administration, certainly in infrastructure spend, very focused on a traditional energy sector, which has benefited WSP in some fashion. Obviously, tremendous investment in AI, but also put in place the Government Accountability Office which was designed to review many projects that were outstanding during the IIJ funding process. So I think it was 2,500 projects that had to be reviewed by the Government Accountability Office and you combine this with the permitting reform that has been taking place in the last 12 to 18 months, it is creating some delays. Whether you like it or not, when you're changing priorities like this and you're reviewing projects like that, it is going to create some delays. The good news is, I think those 2,500 projects that have been reviewed and finally approved, very few got either

32:47 delayed for a very long period of time or canceled. So I think for me, when I'm looking at that very high level, I think my feeling and my view of our U.S. business and the market, the infrastructure market in the U.S., has not changed. I think it's a buoyant market. The demand is there. The needs, more importantly, the needs are there. And we have seen backlog growth in the U.S. market. But as I said, I believe the return or the pace at which we are going to be accessing the funding because of everything I just explained will be gradual rather than linear.

33:38 So we are obviously monitoring this, but as I said, no cancellation, but it's the timing of it that is the issue at the moment. So that's the view for U.S. market at the moment.

33:58 Thank you for the call.

34:00 Thank you. We are now going to proceed with our next question. And the questions come from the line of Christa Friesen from CIBC. Please ask your question.

34:12 Hi, thank you for taking my question. Not to beat a dead horse here, but just on the U.S. market, how are you thinking about the extension that's expected on December 11th? Do you really think That will change much in your customers' minds, or is that too temporary? And do you think we really need to wait until the Build America 250 Act is kind of passed into law?

34:45 Look, I don't have a crystal ball, and I'm not a political expert, so I can only tell you what I think is going to happen. I think December 11 will get extended for the new Congress to review what they intend to do and the negotiation they intend to have with the President. But as I said, to me this is noise and when you look at the high level and you look at the business as a whole and you look at the U.S. market as a whole, it is the biggest market in the world where The needs are the greatest. And yes, temporarily we may have a bit of noise in the system, but the backlog is growing.

35:37 I'd like to remind everyone that we deliver 22.5% margin in our U.S. business. It's one of the most profitable markets in the world. and I just think it's just a moment in time and we'll get back on the growth mode when all that noise is behind us.

36:03 Thank you. I appreciate that. Maybe just pivoting to M&A, can you just give us an update on what the pipeline looks like for you and maybe just how valuations are trending there? Thank you.

36:19 Thank you. Look, we've completed three acquisitions in the quarter. Obviously, mind you, smaller in size. We continue to have formal and informal discussions. M&A is part of our fabric. It's part of our DNA. And we believe that our platform continues to be subscale in summary of our business. So the right time with the right opportunities We would like to continue to grow our platform by acquisition. And on valuation at the moment, I'd say that it's quite constant. We haven't seen a major shift on valuation at this point in time.

37:07 But we've done some of our best deals in periods like today, in the past. So we remain on the watch and we'll see what the future will bring.

37:26 Thank you. Appreciate the call.

37:28 Thank you.

37:29 Thanks, Christophe. We are now going to proceed with our next question. And the questions come from the line of Frederic Bastien from Raymond James. Please answer your question.

37:41 Hey, good morning, guys. Just building on prior questions, your proposed acquisition of GCM Corporal clearly suggests growing confidence in Canada's investment outlook. Now, given that WSP's global footprint, you know, are you seeing a meaningful shift in Canada's relative attractiveness when it comes to allocating capital across your platform?

38:05 Not really, Frederic. I mean... If you look back over the last 10 years or the last decade, we probably tripled the size of our Canadian business by headcount, by revenue, by EBITDA. And so our home country has always been extremely attractive to WSB. It's just that we've grown the rest of the world so rapidly in the last decade that as a percentage of our total business, Canada represents, I believe, 18%. Thank you very much. and if and when we find more opportunities in the Canadian market, we're certainly going to be at the forefront of it and we'll want to grow our business.

39:15 No doubt about that.

39:19 Okay, is it fair to say too that, you know, I've been seeing a lot of the global players not really focus on energy for so many years. There's probably a lot of players that are subscale in that particular sector.

39:33 Well, GCM is an example of that. So 600 people. This is not the minimum. We're clearly growing our power and energy sector in Canada with this acquisition and process engineering. And we are accessing a list of blue-chip clients that we didn't have access to in the oil and gas sector and the mining sector. and other power-related sectors. So we're quite excited about this acquisition, actually.

40:07 Okay, sorry. And does your expectation to end the year with a leverage below two times factor in that proposed acquisition? Yes. Okay, sweet. Thank you. We are now going to proceed with our next question. And the questions come from the line of Devin Dodge from BMO Capital Markets. Please ask your question. Thanks. Good morning. Alex, I wanted to start the question for you. I think you mentioned that more clients are doing procurement under framework agreements. I don't believe this gets added to backlog. Just wondering if you can frame how much work you have secured under those type of agreements How this compares to six or 12 months ago?

40:52 I don't have the data in front of me, maybe Alain you do, but in terms of soft backlog and framework, I mean, especially in the power sector, we have a big, big, big portion of our work that is not part of our hard backlog. I'll give you an example, the American Electric, and many more. We are not disclosing it because we are taking a prudent approach in the way we report backlog to our investors. But you are right in saying that a big portion, especially now that we have acquired Power Engineer, and TRC, a big portion of their work is being procured through framework agreement, just a bit different than transportation.

41:57 Understood. Okay, thanks for that. And then just one quick follow-up. Are there any, has there been any progress or plans to apply for an NCIB?

42:11 I mean, as I said in my remark, Devin, the priority right now is to bring our leverage back into our zone, and this is what we intend to do for the rest of the years. And as usual, as we start 27, we always review what our board or capital allocation priorities, and this will be part of the discussion at that time. Okay, makes sense. Thank you. I'll turn it over. We are now going to proceed with our next question. And the questions come from the line of Maxim Sychev from NBC Capital Markets. Please answer your question.

42:50 Hi, good morning, gentlemen. I just had one quick one. I mean, obviously, power has been a very strong contributor year to date in terms of M&A growth. But when we look at some of the ballot measures in the U.S., I'm just wondering if you think that could potentially, you know, slow down the pace of activity, or do you think that's more sort of, you know, optics versus kind of, you know, the potential reality? Just curious your thoughts there.

43:21 Thanks. My thoughts are simple. If I look back, as we reported when we acquired TRC and I acquired Power Engineering for the last 10 years, The CAGR rate of those two firms and their power and energy sector has been north of 10%. Our thesis around our power and energy sector is not related to data centers. And I would tell you, frankly, that a small part of our work in transmission, modernization work in substation design, is related to data centers, Max.

44:08 So we're feeling extremely good about our position in the market with those two acquisitions. And I'm feeling confident that 27, 28, 29 will be great years for that sector as it relates to our work. I think when we announced the power and energy deal and TRC deal, I mentioned that most of the transmission line in the U.S. have reached their peak in terms of useful life. They're around like 30 years, 40 years. So all of that will have to be replaced irrespective of data centers. So I'm feeling very, very good about their position at this point.

44:57 Okay. That makes sense. Thank you so much for the call. Thank you. Thanks, Max. We are now going to take our next question. The questions come from the line of Michael Topholm from TD Cowen. Please ask your question.

45:13 Thank you. Good morning. Hello, Michael. So the first question is just around the U.S. market and the conversion delays you mentioned there. I'm just curious about if you can talk about how you're managing staffing levels in that market in the interim. So it's obviously clear that you see the U.S. demand outlook as positive, and you've continued to see good margin improvement in the Americas segment both year-to-date and in the third quarter. But I'm just curious, again, about how you manage headcount and ensure high productivity during this period here.

45:47 Now, Michael, the beauty of our model is our cost structure is variable. Less than 10%, I'd say maybe 7%, 8% of our costs are fixed. So we are able to be very nimble and agile. So I'll give you an example. Our T&I workforce is the same size as it was on January 1st because we've been very nimble in the way we've been managing. Our TNI sectors because of the reasons I explained today. And that's why we're feeling good about the US market. And we're feeling good. We're looking at our backlog growth and we're like, okay, the work is there. The proposal activity is there. Our win rate is actually increasing, which means we're, in our personal belief, we are stealing market share. But The notice to proceed on some large projects has been taking a bit longer than anticipated.

46:46 And that's why I said that we believe the recovery will be gradual rather than linear. And let's see what this new Congress is going to do on Jan 3rd. But again, if I strip out the noise and I take a break, A long-term view or medium-term view of the market. This is an incredible market. And we are very, very well positioned in all of our segments. So for me, looking back at our results for the quarter, great margin, good backlog growth. And I would add that for two consecutive quarters, we've had 5% organic growth. This is a testament of the diversification of the WSB platform.

47:38 We have our largest market that is experiencing some delays, and yet we are in a position to deliver mid-single digit growth because our other markets are performing. So it's a testament of our diversified platform.

47:55 Okay, that's perfect. Thank you. And then the second question is just turning to the EMEA segment. Strong organic growth and backlog growth has continued there. It seems like the UK continues to be the key driver. I'm hoping you can talk a bit more about the greatest areas of strength for WSP in the UK and also the sustainability of that strength as you look out into next year and we think about the EMEA segment and the organic growth potential.

48:23 Yeah, I think we had two or three consecutive years of almost double-digit organic growth in the UK, so so I'm not going to sit here telling you that for the next few years we're going to continue to always grow at that pace but it's been an incredible market and I can tell you with certainty that we have been growing much faster than our peer group in this market because we have one of the, if not the best brand and we have A great workforce in the T&I sector and the high-rise and property and building sector. In power, we're making great, great headways in the nuclear side in the UK. And so is in the water. In water, we were not a player six, seven years ago. And I would tell you that we're growing at a very fast pace with the M8 cycle.

49:25 and our position in the marketplace. So it's been a great story for us at this point.

49:32 Okay, that's helpful. Thanks very much. We are now going to proceed with our next question. And it comes from the line of Ian Gillies from Stifel. Please ask a question.

49:44 Morning, everyone.

49:48 Morning, Ian. Morning.

49:50 On the topic of EBITDA margins, the revenue mix has probably been a little different than we all would have thought this year. Would it be fair to say that EBITDA margins are trending even a bit better than we all would have thought, just given the U.S. has come in a little lighter from a revenue perspective and it's the best margin business you have?

50:10 Look, our Canadian business is our best margin business that we have, followed by the U.S., which is trailing not far behind. So North America is our best margin. I'd say the best regional margin profile. Yes, the answer is absolutely yes. We've performed better than anticipated because we are going to be finishing the second year of a three-year plan and we already met our target. So I feel that this is giving us flexibility to continue to invest in technology and the business, to continue to really to strengthen the platform, to hire the best talent out there, rainmakers, to continue to grow a business.

51:07 So it's a great place to be when at the end of your second year, you already met your Your objective for your three-year plan. So obviously we're clearly feeling good about what we were able to achieve.

51:22 If we look ahead, I mean WSP has always been very good at identifying end markets before they necessarily become hot-end markets, for lack of a better way to frame it. So when you think about the next few years and you look at end markets you might not be in right now or want a bigger presence, Is there an area that you really want to be, whether it be defense or something else, where there might be a larger spending pie coming?

51:49 If you go back to, if you recall, Ian, the plan that we had unveiled at the beginning of 25, in February 25, we had identified seven select high-growth areas for WSB. I can tell you that those seven high-growth areas are very pertinent They haven't changed. Program project management is an area that we would like to grow. Water is an area that we will continue to grow. Defense, we are making great headways in Australia, in UK, in Central Europe, in Canada. We're going to put a lot of emphasis into that over the course of the next few years.

52:36 Power and energy, I think it's unfinished business. We probably have the largest platform in the U.S. right now, by stretch in my personal opinion, but it's unfinished business in the rest of the world. Last year we made an acquisition in Spain, but there's so many other markets that we would like to increase our presence. So I could go on and on and on like this, but there are six or seven sectors that I believe in the next few years we will grow and we will want to grow. and that will have to take place through organic growth but also inorganic growth and that's why I still believe in our investment thesis and I haven't changed my mind irrespective of what we have seen on valuation in the industry.

53:28 You know that I have a long-term view on things and I think that's what made us successful in the past and I think that's what will make us successful in the future. So I do think that there's a lot of runway for this platform and I'm very excited about the future.

53:45 Thanks very much. That's a very helpful detail. I'll turn it back over. Thanks Yann. We are now going to proceed with the next question from the line of Chris Murray from ATB Coma Capital Markets. Please answer your question. Yeah, thanks folks. Just a couple quick ones. One, I don't think we talked about the leadership change in the U.S. Can you talk a little bit about that transition and how you were thinking about positioning with the leadership team for the next little while as it seems like, you know, maybe government-related work is going to be more important and just thinking about kind of the different puts and takes about that business over the coming years.

54:28 Look, Joseph Sczurko, This was a planned retirement when we acquired the Wood E&I business in 2022. There was an agreement between Joe and I that Joe would give us four or five years and Joe done incredible work for our organization and has been an active contributor to the building of our US business in recent years. So I want to thank him for his service and Joe is elected to retire. This was in the mix. So we intend to find a replacement very soon. I'm not in a position to talk about it now, but we intend to make an announcement in the not so distant future.

55:20 And for us, it's business as usual. We have our chief operating officer that is acting as interim CEO right now. We have a very, very strong leadership team in our U.S. business. So for us, it's business as usual, and we'll make an announcement when ready. All right, fair enough. And then just one kind of housekeeping question, Alain, more for you, just on working capital transition and I guess getting back to that sub two number. I guess a couple of things. One, is there anything that we should be thinking about that's unusual in the quarter in terms of working capital pickups other than kind of normal seasonality, which really boosts that number? and along those lines, you know, just a quick question just from some of the larger acquisitions as you've had time to season them now.

56:13 Is there anything in their DSO numbers that you feel like there's more opportunity to get them down? So any color on that would be appreciated.

56:24 All right. So nothing special in Q4 in working capital adjustments. So it's going to be the normal It's our best quarter all the time in terms of free cash flow generation, so we expect this year to be the same. As for acquisition, DSO trailing, we don't disclose that, but largely I would say there's still opportunity where there's always opportunity. I guess, Chris, that'd be my message to keep on refining and optimizing our working capital management. Okay, that's great. I'll leave it there. Thanks, folks.

57:02 Thanks. There are no further questions showing, so I'll now hand back to the speakers for any final remarks. Thank you.

57:11 Well, thank you very much for attending the call. Thank you for a very good question, and we look forward to updating you in Q4. So on that note, I would like to wish you a great day. This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.