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Stantec Inc (STN) Q4 2020 Earnings Call Transcript

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STN earnings call for the period ending December 31, 2020.

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Stantec Inc (STN 2.15%)
Q4 2020 Earnings Call
Feb 25, 2021, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone, and welcome to Stantec's Fourth Quarter 2020 Earnings Results Conference Call. Leading the call today are Gord Johnston, President and Chief Executive Officer; and Theresa Jang, Executive Vice President and Chief Financial Officer. Stantec invites those dialing in to view the [Indecipherable] presentation, which is available in the Investors section at stantec.com. [Operator Instructions]

All information provided during the conference call is subject to the forward-looking statement qualification set out on slide two, detailed in Stantec's management's discussion and analysis and incorporated in full for the purposes of today's call. Dollar amounts discussed in today's call are expressed in Canadian dollars and are generally rounded.

With that, I am pleased to turn the call over to Mr. Gord Johnston. Please go ahead, sir.

Gord Johnston -- President And Chief Executive Officer

Good morning, and thank you for joining us. I'll begin our call today with a look back at 2020, review our progress over the year and provide an update on fourth quarter business performance. Theresa will then delve deeper into the financial results and review our 2021 targets, and then I'll return to provide closing remarks. In 2020, a year marked by unprecedented business disruption caused by the COVID-19 pandemic, Stantec continued to demonstrate our operational resilience. The diversity of our business, our global reach and our deep connections to our employees, clients and communities served as strengths as we weather the storm. The world has changed over the past year, and there's been a shift in priorities. Sustainable development is now even more of a priority for governments, organizations and investors around the world. And that's why I'm so proud that Stantec was named the 5th most sustainable company in the world and the 1st in North America by Corporate Knights. Operating sustainability is good for our employees, good for the environment and good for the bottom line.

With our continued focus on operational performance, we came into 2020 well positioned and our focused execution throughout 2020 drove the best financial performance in Stantec's 65-year history. We've also made the foundation for future earnings growth through the value creators of excellence, people, innovation and growth, which are the cornerstones of the strategic planning we rolled out at the end of 2019. Despite the disruption caused by the pandemic, we were able to deliver revenues that were consistent with 2019 as a result of the dedication of our employees and our focus on efficient project delivery. Through solid project execution and exceptional cost management, we delivered a strong 15.7% adjusted EBITDA margin. Lower interest costs resulting from strong cash flow management and tax recoveries recognized in the fourth quarter further contributed to a 10% year-over-year increase in adjusted diluted earnings per share to make 2020 a record year.

We exited 2020 with an in vivo backlog that grew organically by 3.1% year-over-year to $4.4 billion, representing approximately 11 months of work. We resumed growing through acquisition after pause early in the pandemic, we completed three transactions in the fourth quarter of 2020. And last week, we entered into an agreement to acquire GTA consultants, which grows our presence in Australia by more than 10%. These strategic acquisitions have added almost 600 employees to the Stantec family in the last four months. Our balance sheet and M&A pipeline remains strong, and we remain well positioned to grow through acquisition in 2021. We also achieved a key milestone in the fourth quarter by establishing and defining our 2023 real estate strategy, informed by our sustainability targets and our desire to be an employer of choice, our objective is to design the workplace of the future. This includes offering flexible work arrangements, leveraging our top-tier in-house workplace design talent and embracing new tools to facilitate distributed work. Our strategy is informed by both the survey of our employees preferred work arrangements and a detailed review of our entire office lease portfolio.

Our 2023 real estate strategy has two major components: The first component is the lease space no longer required by the business, and we expect this to drive an increase in EPS of approximately $0.10 per share in 2021; the second component of our strategy is to implement our flexible workplace model as leases naturally expire over the next three years. Approximately 1/2 of our office space portfolio expires over this 3-year period. And with this further reduction in our occupancy footprint, we expect to increase EPS by an additional $0.25 to $0.30 by the end of 2023. And from a [Indecipherable] perspective, this translates to an approximate 30% reduction in our existing real estate footprint by 2023. So you can see why we're so excited about this initiative. It supports our objective to design the workplace in the future. It provides our employees with the opportunity for a more flexible work arrangement that helps to achieve our sustainability objective and it delivers real value to shareholders, adding EPS of $0.35 to $0.40 over the next three years. Our real estate strategy will play an important role in lowering office-based emissions in support of our commitment to achieve carbon neutrality for 2022 and net 0 for 2030.

The efficiency of our operations, our profitability and our sustainability are all enrollment into our long-term strategy. We consistently come on on top in sustainability ratings across multiple independent third parties. In addition to our Corporate Knights ranking, Stantec is rated as a climate leader with an E minus score by CDP, and we are the only firm in our space that has achieved that rating for the last three years. And this illustrates the sustainability isn't something new for Stantec, it's been a part of our DNA for decades. Our IFS ESC quality score continues to outperform our peers year after year and our sustainalytics rates our ESG score as low, which again is top of class. Now turning to the performance of the business. Revenue held up quite well in the United States for both the quarter and the year. We saw modest growth in our water business through expansion efforts into our Pacific and U.S. markets in particular, growing urban populations and climate change are resulting in significant water serious [Indecipherable]. And as an example, we estimate a spend of $15 billion to $20 billion over the next 15 years in Southern California alone to address water scarcity.

In October, we announced that we're leading a pure water San Diego program, a multibillion-dollar initiative to supply local sustainable water to San Diego's 1.4 million residents. And in addition to this, Stantec gives the prime consultant for the treatment-related works on the metropolitan water district of Southern California's regional recycled water program, and we've also been selected as a key sub-consultant on the state of Los Angeles Hyperion 2035 program. Stantec is the only consultant with a leading role in these three ongoing flagship projects. Growth in our energy and resources business was driven by a continued ramp-up of renewable power projects, and we see significant opportunities for Stantec energy and resources and Environmental Services business going forward, for the U.S. officially rejoining the Paris Climate Accord. Partly offsetting this growth was the continued wind down of several major transportation projects. In addition, our buildings business is still being impacted by the pandemic, but we're beginning to see growing momentum in the pivot toward e-commerce, healthcare and other sectors, including the U.S. federal government.

Our business development pipeline was very active during the fourth quarter. And in addition to the pure water contract I just touched on, we also announced that we're the prime consultant as part of a P3 team for six public schools in Maryland, we're the design and rehab of nine key bridge projects. And earlier this week, we announced our lead designer role for a heavy repair and overhaul facility design-build project for the Washington Metropolitan Transit Authority. Revenue generation in Canada was solid due to our strong focus on our clients and account management programs. We saw organic growth in our water and environmental services businesses during the fourth quarter, partly offsetting a contraction in energy and resources, building and infrastructure. We've seen a growing focus on water infrastructure, particularly around irrigation and improved water management, and our teams have recently been awarded two large irrigation projects in Western Canada. We signed three major hospital contracts in the quarter, including our role on the St. Paul's Hospital project in Vancouver, demonstrating our growing momentum around the pivot to healthcare currently taking place in our Canadian Buildings Group.

We also announced our participation in the 360 -- 360 transitive alliance joint venture during the quarter, which will oversee an estimated $28.5 billion in capital investment for Toronto's transit infrastructure. Organic growth in our U.K. water business was driven by the ramp-up of the AMP7 framework through 2020. We've increased our market share of these five-plus year frameworks winning most of the key water utilities in the U.K., including tens Water, which is the largest U.K. utility and serves roughly 15 million customers. The asset on frameworks we secured total approximately $120 million a year across the U.K. business, securing our backlog in 2025 and beyond. Australia and New Zealand have also begun to adopt the service delivery model. And in 2020, we won key programs with utilities like Sydney Water, Melbourne Water and Brisbane Water in Australia. And with Christchurch, Wellington and Watercare in New Zealand, securing our backlog in 2023 and beyond and totaling roughly $70 million a year.

Transportation stimulus funding in the U.K. and New Zealand are fueling the infrastructure business in these regions, and our recent acquisitions have strengthened our ability to participate in these key projects. In addition, growth in our global power and dams and mining business also helped to offset a pandemic-related weakness in our global environmental services and buildings businesses. During the quarter, we signed several projects funded by European development agencies, including a contract for the conceptual design of the multipurpose port on Kuramae Island and on the West Africa's regional transportation governance project, and we're also awarded the summer sitdown improvement project in Queensland, Australia, and with this award, we are currently working on virtually every major dam improvement project in Australia. Overall, our business performed very well in 2020, and we entered 2021 with growing optimism thanks to the strength of our client relationships, solid backlog and the positive trends impacting many of our business operating units.

And with that, I'll turn the call over to Theresa for a review of our financial performance and our outlook.

Theresa Jang -- Executive Vice President and Chief Financial Officer

Thanks, Gord, and good morning, everyone. Adjusted net income from continuing operations for the fourth quarter increased 28% to $67 million, which represented 7.8% of net revenue. Adjusted earnings per share also increased 28% to $0.60 per share. Q4 earnings exceeded our expectations with net revenue generation slightly stronger and discretionary costs significantly lower than anticipated. Our solid adjusted EBITDA margin of 16.1% was bolstered by approximately 50 basis points as a result of the recovery of claim costs on historical projects. But even excluding this nonrecurring item, adjusted EBITDA is very solid, reflecting our success in mitigating COVID-19's impact on organic net revenue growth and gross margins. Also in Q4, strong cash flow generation led to lower-than-expected interest expense. Earnings were further augmented by the favorable resolution of certain tax matters recorded in the quarter. As Gord mentioned earlier, we've initiated our 2023 real estate strategy. And as a result, we recorded a noncash impairment charge of $66.7 million.

Turning to full year 2020 results. Adjusted net income from continuing operations increased 11% to $249 million in 2020 or 6.8% as a percentage of net revenue. Adjusted earnings per share increased 10% to $2.22 per share. Earnings for the year exceeded our expectations on the strength of our fourth quarter performance and the nonrecurring items previously discussed, which collectively contributed approximately $0.10 to our EPS. As a result of reduced discretionary spending, adjusted EBITDA increased year-over-year to $579 million. Adjusted EBITDA margin increased to 15.7% in 2020, compared with 15.5% in 2019. The claim cost recovery recorded in Q4 contributed approximately 10 basis points to our 2020 adjusted EBITDA margin. Our balance sheet remains in great shape as a result of strong cash flow generation and cash management. We closed out the year with net debt to adjusted EBITDA below our targeted range at 0.7 times. Days sales outstanding was 75 days at the end of the year, a four-day year-over-year reduction. And it's worth noting that over the last two years, we reduced DSO by 13 days. And while there will always be factors outside our control that can move DSO in either direction, much of the improvement over the past two years is the result of our increased focus on timely billings and collections, as well as proactive management on contract payment terms. Moving on to liquidity and capital allocation.

We generated $191 million in free cash flow in the fourth quarter. Annual free cash flow improved 60% year-over-year to $440 million. During the year, we returned $148 million to shareholders, $68 million through the payment of our dividend and $80 million through share buybacks. On October 8, we strengthened our capital structure through our inaugural bond offering, issuing $300 million of seven-year notes. And we continue to focus on disciplined capital allocation, balancing the return of capital to shareholders with opportunities to deploy capital toward acquisition activity. Yesterday, we announced that our Board has increased our dividend by 6.5%, reflecting our ongoing confidence in our long-term profitability. Our performance in 2020, along with the progress of our strategic initiatives, has increased our earnings expectations for 2021 from the [Indecipherable] we established in November 2020. The main driver is the cost savings will give from reduced occupancy costs, which as Gord mentioned, will add approximately $0.10 per share to 2021 EPS.

This will completely offset the outlook of the $0.10 we generated from the nonrecurring claim costs and tax recoveries in 2020, and we expect to grow 2021 earnings further, driving to an overall year-over-year increase on a percentage basis in the low to mid-single digits. We're also to date increasing our 2021 target, are raising the top end of our adjusted EBITDA margin by 50 basis points to 16%. This is driven by our continued strong operating performance and our expectations that discretionary spending will stay lower for longer, given current travel restrictions. However, given the ongoing uncertainties associated with the pandemic, we left the low end of the range at 14.5%. We're now expecting adjusted net income to be greater than 6.5% of net revenue, a 50 basis point increase in our target, and we've also raised our adjusted return on invested capital target by 50 basis points to be greater than 9.5%.

And with that, I'll turn it back to Gord for his concluding remarks.

Gord Johnston -- President And Chief Executive Officer

Thanks, Theresa. Through 2020, we made excellent progress on the strategic plan we launched in December 2019 despite the challenges posed by the pandemic. And I encourage you to review our annual report for a more in-depth review of our key accomplishments. As Theresa and I spoke about earlier, our 2023 real estate strategy with the goal of reducing our office lease footprint by 30% over the next three years, will result in a material increase to net income and EPS growth. We're also affirming today that we intend to meet our long-term financial targets as filing our strategic plan by the end of 2023. We entered this year with a solid backlog of $4.4 billion and expect to return to low to mid-single-digit organic growth over the balance of 2021. We're back in the full swing of our M&A program, and we're ready to continue down this path in 2021 with the benefit of our strong balance sheet and a robust M&A pipeline. I want to close by thanking our employees for remaining steadfast through the pandemic. It's their hard work in continuing to execute our strategic plan and serving our clients that drove record earnings in 2020, while achieving best-in-class sustainability arrangements, and we're going to continue to lean on our core values of doing what's right and putting people first as we move forward into 2021 and beyond.

And with that, we'll open up the call to questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] Our first question from Jacob Bout with CIBC. Please go ahead.

Jacob Bout -- CIBC -- Analyst

Good morning. So I had a question about the planned lease office footprint by 30%. Have you pulled your employees to understand how they're feeling about it? I think we're all getting a little tired of working from home socially during this pandemic?

Gord Johnston -- President And Chief Executive Officer

Yes, Jacob. In fact, we've surveyed our employees a couple of times through the pandemic, and we found that their thoughts on working at home versus the office has changed a bit throughout. Early in the pandemic looking back in March and April, as we talked to people what they thought they might want to do, the response was, "this is great, we want to work from home forever." But what we found that we didn't think that, that would be an accurate reflection of the long-term perspective. And so as we've talked to folks throughout others in the industry as well, we found that what people are looking for is a little bit more flexibility where they could perhaps be in the office a couple of days a week, but also have the flexibility to work at home one or two days a week. And that's sort of how we're redesigning our office footprint.

We have a workplace design group in our Buildings group within Stantec and so we're working very closely with that group on what we might do within our company as well as advising other clients. And so we really think it's important to have those people not work that home exclusively because we have a very collaborative design presence. And so it is important for us to still be able to bring people together. So as we look at our longer-term footprint with a certain percent still being full-time in the office, another percentage being part-time office with maybe some flexibility work in home once in a while, but there will be a small subset that we will allow to work at home full time. And based upon that design, therefore, we look at that, roughly a 30% reduction in our occupancy footprint.

Jacob Bout -- CIBC -- Analyst

Okay. And you said there's a $0.10 impact for 2021 and 35% to $0.40 over the next three years?

Theresa Jang -- Executive Vice President and Chief Financial Officer

Yes. The $0.10 is part of the $0.35 to $0.40 that we expect over the next three years.

Jacob Bout -- CIBC -- Analyst

Okay. And my second question here is just on the longer-term targets you have. I think you said your net revenue CAGR greater than 10%. So clearly, M&A is playing a key role here. Talk a bit about how your pipeline is looking, the -- and how valuation is looking and assuming in this market, multiples are getting a little stretched?

Gord Johnston -- President And Chief Executive Officer

Yes. So the M&A pipeline is very, very robust. And you can see, of course, we've mentioned we closed three, announced another one here just in the last three or four months. What we're finding is that while the pipeline was robust going into the pandemic, slowed a little bit as we talked about before through last March, April, a little bit into June, but really it strengthened and we've reinvigorated all the discussions that we had ongoing previously, but there's been a lot of new conversations that we've initiated really just over the last couple of quarters. So pipeline very, very strong across all of the geographies where we're active. It's interesting, initially, in the pandemic, we had hoped that we see some -- a reduction in multiples, but certainly, we haven't seen that. In the firms that we're talking to, we've seen multiple stay reasonably consistent. You've seen some of the larger public transactions that have been announced recently that had higher multiples, but we really haven't seen that significance of an increase in the firms that we're talking with.

Jacob Bout -- CIBC -- Analyst

Sorry. And what are those multiples? And is the focus still small and midsize?

Gord Johnston -- President And Chief Executive Officer

Yes. A lot of the firms that we're talking to, we're seeing the multiples still in that six to nine kind of x range. And our main focus is still in that that sub-1,000 person firm because that gives us the opportunity to select the exact type of firm we want in the geography that we want to specialize in, but that said, our balance sheet is very, very strong. The -- our organization has really matured in the various footprint outside of North America where we're resident. And so we are, as larger opportunities come along, we absolutely look at them, but I wouldn't call a change in our strategy. Our strategy is still not a 1,000 person or less, but I think we -- now we've got a little bit more flexibility to look at some of these larger ones, if they're appropriate for what we see for our long-term role.

Jacob Bout -- CIBC -- Analyst

Thank you. I'll leave it there.

Gord Johnston -- President And Chief Executive Officer

Thanks, Jacob.

Chris Murray -- ATB Capital Markets -- Analyst

Thanks. So just maybe going back to thinking about the real estate part of the equation. So just to confirm, so you're talking kind of $0.25 to $0.35 a couple of years out. That's correct?

Theresa Jang -- Executive Vice President and Chief Financial Officer

Yes. Yes. What we said is we expect about $0.10 in 2021. And on top of that, $0.25 to $0.30 by the end of 2023.

Chris Murray -- ATB Capital Markets -- Analyst

Okay. I'll [Indecipherable]. Okay. So I'm just trying to understand the cadence of it. And then just thinking about that, there's the earnings piece of it, but there's also, I guess, the the liability side of the leases. Can you talk a little bit about how this plays into your longer term return on invested metrics?

Theresa Jang -- Executive Vice President and Chief Financial Officer

Yes. I mean, absolutely, will lift our return on invested capital because the ability to redeploy capital toward other things that otherwise would have been in servicing these leases is what part of the opportunity. So with -- as Gord described, there are these kind of two prongs to the strategy: One is we've looked at space that we have determined. We don't need any longer. And that's where we took an impairment charge. So all of those leases have to sort of been bundled and modeled, and we took about a $67 million impairment charge in the fourth quarter. So now as we go forward: one, we don't have to incur those -- these costs through our P&L and two, the opportunity to sublease that space will provide sublease income to offset; and then the second element is, again, that there's a pretty opportunity for us in that, roughly 50% of our existing lease space is naturally going to expire over the next three years. And so that gives us just a really great opportunity then to not have to impair that space, but as they expire to be able to change and reduce our footprint going forward. And so that's where that opportunity for the come from over the next three years. So those are really the two key components and the way that the math works.

Chris Murray -- ATB Capital Markets -- Analyst

Gord, just I guess the other question I have for you is just thinking about your longer-term net revenue growth, the interesting part about putting in a CAGR number when you change the timing is that it moves around, but if I go back historically, and you talked a little bit to, I think, to an earlier question about that 1,000 person. I mean, there were years that you guys were doing 15, 16 acquisitions a year of various sizes and then a platform every couple of years. Is that how we should be thinking about the way you think that this unfolds over the next few years to hit that kind of number?

Gord Johnston -- President And Chief Executive Officer

Yes. I would think so, Chris, that sort of we're going to continue with our -- we call it the sort of the base hits, the infilling of the right firm and the right locations. And then when the timing is right, the opportunity is right, we might look at doing something a little bit larger, as you say, from a platform perspective.

Chris Murray -- ATB Capital Markets -- Analyst

Okay. That's all my question. I'll pass on the line. Thanks very much.

Gord Johnston -- President And Chief Executive Officer

Thanks, Chris.

Operator

We'll take our next question from Frederic Bastien with Raymond James.

Frederic Bastien -- Raymond James. -- Analyst

Good morning. Quick question for you. Are you comfortable with can you tell me if you're comfortable with the relative waiting of your five operating units right now? I believe infrastructure is close to 30%. I mean you've got environmental services and energy [about] 15%. Is this sort of a play where you're comfortable being at equilibrium or is there -- are there opportunities to grow some of these business units further or at a more aggressive pace on a go-forward basis?

Gord Johnston -- President And Chief Executive Officer

Yes. I do think that, in particular, our water business, which is currently about 21%, we'll see continued opportunities for growth there, both from an organic perspective. For the year, our water business grew organically by just a little bit over 4%. So it's going to continue to grow organically, but I do see continued opportunities for us to invest in the water space from an M&A perspective. So I see particularly that area. Our environmental services, we're continually looking for ways to continue to grow that as well. So I think over time, the type of firms that we're looking at are water firms, environmental services firms and then also a little bit into transportation and buildings. So I think those, you'll see those as being the primary areas of focus for us. So over time, I would like to see the water business and the Environmental business grow a little bit more. And so we're putting a particular focus on those areas right now.

Frederic Bastien -- Raymond James. -- Analyst

Okay. Great. That's helpful. In terms of high-level kind of priorities for this year, would you mind kind of maybe flagging or highlighting your top three priorities?

Gord Johnston -- President And Chief Executive Officer

Sure. The -- after spending a couple of hard years looking at the back office and getting the sort of the back of house taking care of from organizational structure perspective and leading the organization and so on, 2020 is really the year where we're focusing on growth -- 2021, sorry. And so we're really focusing on our organic growth programs. And we've had great success over those the last couple of years. We're going to continue to focus on that. We're going to continue to focus on M&A because as we talked earlier, our balance sheet is in great shape. We've got the maturity and the appetite to continue with that. And then also, we want to continue to focus on our innovation programs that we had just rolled out in really in a formalized way at the start of last year. We see that as a differentiator as we move forward, both in terms of new service offerings, new technology offerings that we can bring to market. So growth and innovation, absolutely. We will continue to focus on the backup house is operational, no question, but that's always there, but I think you'll really see a focus for 2021 for us on growth and supporting innovation.

Frederic Bastien -- Raymond James. -- Analyst

Okay. Thanks, Gord. Good to hear that.

Gord Johnston -- President And Chief Executive Officer

Okay. Thanks, Frederic.

Operator

Our next question comes from Mona Nazir with Laurentian Bank. Please go ahead.

Mona Nazir -- Laurentian Bank -- Analyst

Good morning and thanks for taking my questions. First, when I'm just thinking about your organic contraction that you had in the quarter and even the year ahead of a number of peers in spite of you guys having greater Canadian exposure and greater energy base. I'm just wondering, looking back, what do you think help shield or insulate the business? I mean you had mentioned in your opening remarks, three new hospital contracts awarded. I just wondering if you had to pivot the business to new areas or bulk up expertise in other areas or really was it due to mix?

Gord Johnston -- President And Chief Executive Officer

Yes. So I think the real focus for us was on our organic growth programs. We've really been focusing hard the last couple of years, but really through 2021, 2020 as well so that not only did our backlog grow organically by over 3% through the year, but I think that also was a big driver why our organic retraction was 1.8% for the year, but to your point about pivoting, I think that's exactly right as well. And nowhere do we see that as evidence is in our buildings business where the commercial work that we are doing, restaurant, fit ups, new retail, a lot of those projects are pushed off to the right, but we really pivoted to healthcare, particularly in Canada and Australia, and we pivoted toward e-commerce facilities and doing a lot of great support. We have some global MSAs, master services agreements, with those firms. So I think it's really the focus on organic growth through -- we've got a number of solid programs, our account management program. We have a corporate campaigns program, a strategic growth initiatives program. So I think those are very, very important, and we'll continue to drive flow through 2021.

Mona Nazir -- Laurentian Bank -- Analyst

Okay. That's helpful. And when I'm just going through the MD&A, the headcount is stated in there at 22,000. I just wanted to ask to your end, have you taken any steps to rightsize the business in any area or are there plans to in the future and just related to that, how is utilization sitting?

Gord Johnston -- President And Chief Executive Officer

Yes. So from a headcount perspective, absolutely, we've had to manage our headcount throughout the year. We've addressed that proactively in managing utilization. We actually saw our utilization rates early in the pandemic spiked by 3% to 4%. And then they've sort of come down to more normal type seasonally adjusted levels, but what we really try to do, in addition, was to not go too far from a headcount reduction perspective because we see that the work is there as you can see from our growth in our backlog. We see the opportunity for good stimulus from a number of different government locations coming here in 2021. And so as a result of that, we wanted to make sure that we have the right team to drive us forward into the future as well.

Mona Nazir -- Laurentian Bank -- Analyst

Okay. So would it be fair to say, though, that any rightsizing that did occur in the year because the 2019 headcount was 22,000 as well. So any rightsizing that did occur in the year was largely offset by M&A?

Gord Johnston -- President And Chief Executive Officer

Yes. I think that's a fair statement, Mona.

Mona Nazir -- Laurentian Bank -- Analyst

Okay. Perfect. And just lastly for me. And going back to the M&A, it's just really more of a confirmation. I understand you have made a number of smaller-sized tuck-ins, and you did speak about a number of new conversations occurring with targeted firms, but given current leverage levels, is it feasible that we could see a number of medium-sized transactions, call it, four to five transactions kind of simultaneously within a shorter timeframe that could bring in a potential like combined 3,000 people over five or six transactions or would be -- that be outside of the targeted pace?

Gord Johnston -- President And Chief Executive Officer

I think our balance sheet would certainly support that, but it really all depends on the opportunities. We have to find the right firms and the right geographies that are selling for the -- to have the right motivation to sell. So if the opportunities were there, we certainly could drive that forward. But we're not trying to hit a particular quota. We want to say continue to be disciplined in our M&A strategies, what we're paying so that we can see that long-term accretion to our share price, but if the right firms come along, you're right, we've got the balance sheet room to do it.

Mona Nazir -- Laurentian Bank -- Analyst

Okay. Perfect, but that is the upside of the realm of possibilities. I'll leave it there.

Gord Johnston -- President And Chief Executive Officer

Thanks, Jacob.

Operator

We'll take our next question from Chris Murray with ATB Capital Markets.

Michael Tupholme -- TD Securities -- Analyst

Thanks, good morning.

Gord Johnston -- President And Chief Executive Officer

Good morning, Michael.

Michael Tupholme -- TD Securities -- Analyst

My first question relates to your organic revenue growth guidance. You've talked about -- or you've reiterated your expectation for low to mid-single-digit organic growth in 2021, which is consistent with what you had talked about last quarter. I'm just wondering how we should think about that as we progress through the year, including whether or not we should be thinking about year-over-year organic growth in the first quarter being negative or is that a positive?

Gord Johnston -- President And Chief Executive Officer

Yes. That's exactly where our thoughts are as well, Michael. Q1 of this year is comparing against a pre-pandemic Q1 of '20 so we do still foresee some overall organic retraction in Q1. But really, that low to mid-single digits is sort of where we expect to be with through Q2, three and 4, particularly loaded toward the back half, but we -- that's sort of an annualized number that we would see in that low to mid-single digits.

Michael Tupholme -- TD Securities -- Analyst

And then just sticking with organic growth, you provided some detail around your expectations for your geographic regions. On that front, can you talk a little bit about the thinking behind muted organic growth in the U.S.? I know your guidance doesn't incorporate any U.S. infrastructure that may come, but seems as though expectations for overall general growth in the U.S. are fairly upbeat. So wondering just what's driving the muted outlook there. And I know that isn't any different than you talked about last quarter, but just some thoughts there? And then secondly, any commentary on growth expectations by business operating unit as well?

Gord Johnston -- President And Chief Executive Officer

Sure. In the U.S., we were just sort of being consistent and cautious. We do believe that there will be a U.S. infrastructure stimulus package coming out. The industry thoughts were that President Biden would announce it in February, there was some speculation you might have done it yesterday, but I think we're working through some other -- he's working through some other things first, of course. So we do see that stimulus program coming, but again, there's probably going to be -- it could be a quarter or two lag from when it's announced to when our industry, in general, will begin to start generating some revenue from it. So I think we're just being cautious there, but as we look at the various -- the various business operating units to your second question, buildings overall, as an example, the commercial market remains challenged, but we've really seen this pivot to healthcare coming in the Building segment. And we talked about the same cause project in Vancouver, but we are also awarded two additional projects with Trillium Health Partners there in the trona in the Mississauga Hospital, Queensway Health Center, the Footscray Hospital in Australia. So we're seeing a lot of work in healthcare buildings, we're seeing a lot of pivot to e-commerce. As many of us, people are buying more and more things from e-commerce. So we do see some good tailwind for building coming, particularly -- I think we'll see that revenue generation coming into the second half of the year as these projects get ramped up.

In our energy and Resources business, we're seeing great opportunities in the Pivots renewables solar wind, Hydropower and so on, a lot of good, good opportunities there. And of course, because copper and iron ore prices are so high, those present really good tailwinds for our mining business. In our Environmental Services business, 2020 was a very solid year for that business. Revenue was roughly flat from 2019, but we're seeing really solid backlog in that group and great opportunities to come -- to see that happening as well. Just finishing off the walk around the business operating units. In infrastructure, our transportation market is very, very strong. And of course, we see that grouping a net beneficiary of various stimulus programs that will be announced around the globe, but we've got a really solid backlog into 2021 already for that group. And of course, our community development group is part of infrastructure as well. We see the housing market strengthen in both Canada and the U.S. and it was interesting talking with the leader of one of our land development clients recently described the market in the Southern U.S. is almost frothy because it was so busy.

And then finally, looking at water, we had really solid organic growth in the water segment in 2020 even despite the pandemic. Backlog is really strong. I mentioned a couple of those irrigation projects in Canada. Long-term map projects in the U.K., the long-term frameworks awards in Australia and New Zealand. And certainly, some of the opportunities in Southern California. So great opportunities in water. There's element -- when we look at some of the emerging technologies in water like PFAs, another advanced tech treatment. We're already leading the charge on a lot of those things. So we see opportunities in water scarcity and reuse and coastal resilience and response to sea level rise. So in general, as we kind of look across the business, we see positive long-term prospects in virtually all of our opportunities and just going to be a slower ramp-up in some growth rather than others. So that's where we feel pretty comfortable with our -- over the year, low to mid-single-digit organic growth.

Michael Tupholme -- TD Securities -- Analyst

Great. That's very good color. Can I just sneak in one additional question. Maybe this is for Theresa. Just on the real estate occupancy cost savings opportunity, can you talk about where those savings will actually show up on the income statement. I'm just wondering if this is all through in the admin and marketing? And if that is the case, a bit surprised that there is no adjustment to the admin and marketing expenses as a percentage of revenue guidance, which is still in the 37% to 39% range?

Theresa Jang -- Executive Vice President and Chief Financial Officer

Yes. Well, thank you for asking that question because it [Indecipherable], it's a really important one that we should have highlighted. The unfortunate part of IFRS 16 is that this is really going to show up below the EBITDA line. Now that all of your leasing activities get reflected in depreciation and interest for line item. So there's going to be a minimal impact on EBITDA on a post-IFRS 16 basis, but it does drop to the bottom line. It is still positive to cash flow, ultimately, but unfortunately, does not really move the needle on EBITDA.

Michael Tupholme -- TD Securities -- Analyst

Got it. Thank you.

Gord Johnston -- President And Chief Executive Officer

Okay. Thanks, Michael.

Operator

Alright. We'll take our next question from Sabahat Khan with RBC Capital Markets.

Sabahat Khan -- RBC Capital Markets -- Analyst

Thanks and good morning. Just kind of building off of the last question around the savings and the 3-year target. I guess, how should we think about the drivers of the EBITDA margin improvement, I guess, just real state funds, it sounds like it's a relatively large contributor, but what else is driving, I guess, EBITDA margin improvement, if this is sort of below the line as you think over the next two years?

Theresa Jang -- Executive Vice President and Chief Financial Officer

Sure. So as we mentioned in our 2021 outlook, some of that is going to be driven, we expect, by continued discipline around our discretionary spending. We had expected it to start to ramp up a little sooner in 2021, but as we pointed to the ongoing travel restrictions means that we will likely be able to push that out a little bit further into the year, if not beyond that. We've also said, though, that we don't intend to go back to the level of spending that we were incurring pre-pandemic. We've got all these fantastic collaboration tools. So we know that the need for travel can be addressed through virtual meetings in a large degree. So the direction we've given to people is that when things do open up, we expect cost savings to continue, but certainly not to the level that we've enjoyed in 2020.

Beyond that, we continue to look at our ability to leverage our pruning India operations, which is delivers just excellent delivery for us on both the design side and in our back office. And so we are driving commitments throughout our business for how we can increase our footprint there. We're still currently in that 400-people range. And so there is a lot of opportunity for us to scale that up. And so that is really effective. Beyond cost from just an efficiency standpoint of having that 24-hour clock to be able to use with the times of differences. And beyond that, it's continued focus on discipline, leveraging our Oracle back-end systems that we continue to integrate all of our operations that, again, drive efficiency. And those are really the main things that we'll be focused on.

Sabahat Khan -- RBC Capital Markets -- Analyst

Okay. So I guess some of the stuff that -- on the discretionary side, that's going up, is some of that may be offsetting the real estate savings, if I look at the net revenue CAGR greater than 10% and net earnings CAGR or EPS CAGR of about 11% or more. I guess, has there been some puts and takes with the real estate savings maybe being offset by some of the discretionary spend that you were mentioning that might come back?

Theresa Jang -- Executive Vice President and Chief Financial Officer

Yes, I think so. I think that's a reasonable assumption.

Sabahat Khan -- RBC Capital Markets -- Analyst

Okay. Great. And then I guess, just looking at the three-year target for one you've got actually a few years ago, we did mention our organic growth CAGR in there as well. I know you're mentioning the 2021 organic growth will be there. I guess, how are you thinking about 2022 and beyond? Is it just maybe the lack of visibility that's keeping you from putting those targets? How are you thinking about organic growth over that 3-year period?

Theresa Jang -- Executive Vice President and Chief Financial Officer

We've always talked about our net revenue CAGR of greater than 10% sort of as the number. We haven't really split out organic growth. We typically provide our target for organic growth for the current year for 2021. So we haven't really looked at providing organic growth numbers for 2022 and 2023. There's a little bit of -- my crystal ball isn't completely clear, as I'm not sure anyone is about what's going to happen during the latter part of the year when the opportunities will come, but what we've seen even through the pandemic as any indication, we're just going to keep focusing on our clients focusing on the various organic growth programs we have and hope just to continue with growth in that area in the years to come.

Sabahat Khan -- RBC Capital Markets -- Analyst

We've always talked about our net revenue CAGR of greater than 10% sort of as the number. We haven't really split out organic growth. We typically provide our target for organic growth for the current year for 2021. So we haven't really looked at providing organic growth numbers for 2022 and 2023. There's a little bit of -- my crystal ball isn't completely clear, as I'm not sure anyone is about what's going to happen during the latter part of the year when the opportunities will come, but what we've seen even through the pandemic as any indication, we're just going to keep focusing on our clients focusing on the various organic growth programs we have and hope just to continue with growth in that area in the years to come.

Gord Johnston -- President And Chief Executive Officer

Yes. Great question. So directionally on some of the things, we did talk about in our Buildings segment and some of the healthcare projects that we've got in St. Pauls to a [Indecipherable] there in Toronto. So we're seeing those healthcare projects continuing to move forward on the Buildings side, e-commerce as well, solid opportunities in transportation as well. We talked about our work on the $28.5 billion [Indecipherable] transit initiative in Toronto, which will provide good long-term opportunities. And as well water, we just talked about those two water irrigation projects that we recently were awarded here in Western Canada. Those are significant projects that are in part funded by some of the recent -- last fall, the government of Canada, the -- in some of the infrastructure stimulus programs that they've talked about. So we see got opportunities in water as well. Environment looks good for us. And really, from an energy and resources perspective, our -- the work that we do in the oil and gas segment, as we've talked about before, is really midstream pipeline work. And those projects that we've been working on are continuing. So we just see -- well, we don't see significant growth in those areas. It's just long term, longer duration contracts. So again stability for this year and following.

Sabahat Khan -- RBC Capital Markets -- Analyst

Okay great. Thanks for the color.

Gord Johnston -- President And Chief Executive Officer

Okay thanks, Sabahat.

Operator

We'll take our next question from Mark Neville with Scotia Bank.

Mark Neville -- Scotia Bank -- Analyst

Good morning.

Gord Johnston -- President And Chief Executive Officer

Good morning, Mark.

Mark Neville -- Scotia Bank -- Analyst

Maybe just maybe just a first question. Just on the real estate, over the three-year period, will there be any significant cash loss associated with this consolidation?

Theresa Jang -- Executive Vice President and Chief Financial Officer

Sure. Just not any significant cash loss?

Mark Neville -- Scotia Bank -- Analyst

Yes. Yes. Well the any cash loss associated with this?

Theresa Jang -- Executive Vice President and Chief Financial Officer

No. We're not anticipating that, no. If anything, it will bite our cash flow through this. So we're not expecting outflow for restating our space and in terms of capital expenditures or lease roles, is that maybe what you're asking about?

Mark Neville -- Scotia Bank -- Analyst

Yes. It sort of onetime cost to sort of maybe turn the stuff like that?

Theresa Jang -- Executive Vice President and Chief Financial Officer

No, that's not a part of our plan.

Mark Neville -- Scotia Bank -- Analyst

Okay. And maybe just a question, again, on the three-year plan, would the expectation be that your free cash flow is sort of grow along with your earnings or do you think there's still an opportunity on some of DSOs where you might be free cash flow grow at a rate above?

Theresa Jang -- Executive Vice President and Chief Financial Officer

I think there's always an opportunity. I think we've shown over the last couple of years that we can move the dial on that pretty dramatically. How much more there is -- we're always going to try to improve on that. So certainly, there is a continued focus on it. So I'd say, yes, there is an opportunity. I'm not sure that it will be as dramatic as we've seen in the last couple of years.

Mark Neville -- Scotia Bank -- Analyst

Okay. Thanks for taking my questions.

Operator

We'll take our next question from Yuri Lynk with Canaccord Genuity.

Yuri Lynk -- Canaccord Genuity -- Analyst

Good morning. I just wanted to ask another question on the real estate footprint. I mean it doesn't strike here is a bit early to make a move like this. I mean, I know you said you surveyed your employees. They've done that at our firm as well. And at first, I was all forward. And now I flip-flopping back and forth, I'd love to get back to the office. So just wondering if it seems to me to be a little early, people can change their minds. And then beyond that, I mean, how do you control talent evaluation, margin utilization, fostering collaboration, which I think is important in the industry. Maybe just a little bit more detail on the steps you've taken?

Gord Johnston -- President And Chief Executive Officer

Yes. No, great question. So what we've done there is, in addition to talking to our staff about what they're looking for. We're not looking to have everyone working remotely. As an example, the way that we're looking to roll out our footprint is roughly 50% of the people would be still full-time in the office. Roughly 30 percent-ish would have that ability to be part-time in the office and part-time at home, but those individuals won't have a dedicated workspace. We'll have -- we'll be looking at reducing footprint because some of that will be like selling or temporary use office space. And then the remainder would be folks that could work at home full time. Those would be people who don't have the need to collaborate as much with others. So we do think it's reasonable. It's also going to move over the three-year period as we talk to what as that 50% of our office space comes available over three years. We don't anticipate that there'll be any need to adjust our program, but should we get some huge kickback or the industry changes significantly one way or the other, we still have the opportunity to respond, but I don't think that, that will be the case actually.

Yuri Lynk -- Canaccord Genuity -- Analyst

And the planning to do it now, is it because you feel confident that that's what the employees want or is it also that into Mark's question about urging leases and stuff like that because you just line up with lease expiry that's also cost-effective from that standpoint?

Gord Johnston -- President And Chief Executive Officer

Yes. It's the timing.

Yuri Lynk -- Canaccord Genuity -- Analyst

I'm just trying to get a sense of why do this now, why not later in another couple of quarters?

Gord Johnston -- President And Chief Executive Officer

Right. Well, the important reason for looking at it now is that we've actually been planning this real estate program actually, even from the latter part of 2019. We've been thinking about this, we've been talking to staff, we've been -- and so really, the pandemic just advanced some of those programs, allowed us to try out people working from home, is that really what they want and the way to work through those things. So I think that's that's important. The other thing that is part of the reduction in the square -- beyond that 30% square footage reduction is that we're also looking to reduce our average square footage per person. Those overall space and planning standards because we see our average square foot per person is lower in Europe as an example, that it was America. And so as we acquire firms and we bring them on, some of these firms have larger, less less efficient square footage consumption of office space per employee. So we're looking to sort of get everyone back to more of a standard on that. So that's part of the square footage reduction is that part. Part of it is the flexible work with a ranger part. But really, it's -- the fact that we announced it now is just part of our long-term planning that we've been working on for likely 18 months now.

Yuri Lynk -- Canaccord Genuity -- Analyst

Okay. Solid quarter, and I'm happy to see your outlook.

Gord Johnston -- President And Chief Executive Officer

Great. Thanks, Yuri.

Operator

Our next question comes from Maxim Sytchev with National Bank Financial.

Maxim Sytchev -- National Bank Financial. -- Analyst

Good morning.

Gord Johnston -- President And Chief Executive Officer

Good morning.

Maxim Sytchev -- National Bank Financial. -- Analyst

I was wondering if -- I'm not sure if FEMA is already involved in the Texas situation. Curious to see whether you can leverage grid kind of analytics capabilities to help out in that geography and maybe how the business might evolve over time?

Gord Johnston -- President And Chief Executive Officer

Yes. That's a great perspective. And the work that that are newly acquired -- that we had previously within Stantec, but certainly bolstered through the acquisition of [Indecipherable] really supports that sort of grid strengthening type work that will require -- that they will need to be done in Texas. The fact that Texas grid wasn't winterized and ready for a storm like that has been known for a decade or more. I guess what will be interesting now is whether the regulator and of course, the citizens of Texas will actually require some of that work to be done, but we've known this work as needed to be done since I believe there was a nice storm in 2011. And the results of that were very similar and really no work was done at that point. So we got all the skills. We've got great relationships. And so should the funding come available to actually make some adjustments this time, we're ready and willing to tell, but we've had some discussions already there, but I'm not sure that it has got anything meaningful from a contract perspective at this point.

Maxim Sytchev -- National Bank Financial. -- Analyst

Okay. That's helpful. And Gordon, maybe just a big question of, obviously, as the fleets are being electrified, and I'm talking about the passenger cars and some buses and things like that. Is there a greater opportunity for you guys to benefit from that given sort of all your green credentials?

Gord Johnston -- President And Chief Executive Officer

I do think so, Max, you're right. As more and more people have electric cars and they all break them home in the evening to plug them in, the grid in the majority of our communities can't support it. And so there will be a lot of grid strengthening work required certainly, our -- so our -- the work that we do there from a grid perspective will be required. We also have, through our innovation office, one of our first innovative business opportunities as it relates to connected and autonomous vehicles. So we're coming at it from a number of perspectives: First, the connected autonomous vehicle work that we're doing to consult with clients on how they would roll it out. And a lot of that is planning for the vehicle, planning for the infrastructure, looking at things like charging stations and great strengthening requirements. And so it's all part of the overall package that we're putting together. As you look at other areas like zero-emission buses that the Canadian federal government rolled out a while ago, we're -- we've done a lot of work on 0 miss on buses, charging stations. And in fact, on this one, we're working with the CIB to help administer that program. So lots of opportunities from numerous different perspectives, Max, whether it's on the design side, the program management side, the technology side, we're all over these opportunities from whichever way that we can service our clients.

Maxim Sytchev -- National Bank Financial. -- Analyst

And then maybe just a couple of clarification points, if I may. Gord, I think you talked about housing, obviously being very robust right now. I mean historically, your rent development practice was obviously pretty prevalent in that. I mean, are we seeing a pickup in this vertical and to which extent and how big is it right now?

Gord Johnston -- President And Chief Executive Officer

And then maybe just a couple of clarification points, if I may. Gord, I think you talked about housing, obviously being very robust right now. I mean historically, your rent development practice was obviously pretty prevalent in that. I mean, are we seeing a pickup in this vertical and to which extent and how big is it right now?

Maxim Sytchev -- National Bank Financial. -- Analyst

And then maybe just a couple of clarification points, if I may. Gord, I think you talked about housing, obviously being very robust right now. I mean historically, your rent development practice was obviously pretty prevalent in that. I mean, are we seeing a pickup in this vertical and to which extent and how big is it right now?

Gord Johnston -- President And Chief Executive Officer

Yes. Absolutely. And even with [Indecipherable] like were having here today that had slowed, but we've really seen some great strengthening in the markets in Edmonton and Calgary, certainly GTA, but really in the southern states is where we're seeing a significant pickup in opportunities.

Maxim Sytchev -- National Bank Financial. -- Analyst

And last one, the same question in terms of mining. Obviously, the commodity is up going to stick right now. Do you mind maybe reminding us your level of exposure and how that could be below in, let's call it, the next 12 to 18 months as producers are shopping like pencils on greenfield and brownfield projects?

Gord Johnston -- President And Chief Executive Officer

Yes. So our mining practice, currently its just a little bit less than 5% of the overall revenue generation of the company, but we have early on in the pandemic. We saw mining dropped off as Peru and some of the places in South America closed the mines due to COVID, but certainly, we've seen those working around how we can get staff into the mines to continue to work copper prices, of course, was all-time high is high on oil price is very, very strong gold as well. So we are seeing a pickup in our mining work in South America, Western Australia and other locations as well. So I do see positive tailwinds for mining and then the foreseeable future. Also, we're active in some other things like lithium. We've been doing some work on some lithium mines in example. As we get more and more toward battery storage, battery technology, we can see additional opportunities coming in that area as well.

Maxim Sytchev -- National Bank Financial. -- Analyst

Okay. That's really helpful. Thanks so much.

Gord Johnston -- President And Chief Executive Officer

Thanks, Max.

Operator

[Operator Instructions] We'll take our next question from Benoit Poirier with Dejardins Capital Markets.

Benoit Poirier -- Dejardins Capital Markets. -- Analyst

Yes. Good morning, everyone. Congratulations for the quarter. Just to come back on the real estate question, with respect to the optimization plan. You provide great color about the potential impact in the years to come. But when looking at your average square feet per person, is it kind of is it an opportunity to get closer to your peers or it's really leading the pack and lowering the average square feet per person and try to really make North America more comparable to Europe?

Gord Johnston -- President And Chief Executive Officer

Yes. We're -- it's a little bit of both, actually. That certainly, the European average square footage per person is lower than we would see in North America. In our industry, not just for us, but where our competitive set and overall. So we're doing what we believe is the right thing as we've talked with our clients, we talk about our space planning group, where we can get to. So we're -- I don't think that we're looking to lead the charge and set the lowest possible square footage per employee, that's really not our objective. We want to make sure that we're doing the right thing, balancing cost optimization with ensuring that our employees feel positive about their work environment that they want to come to the office, they want to collaborate. So I think it's a bit of a balancing act, Benoit, as we look to optimizing that real estate footprint.

Benoit Poirier -- Dejardins Capital Markets. -- Analyst

And looking at the backlog, was there anything in particular that drove the sequential decline, I mean, you grow organically on a year-over-year basis. Is it purely a matter of FX era war?

Theresa Jang -- Executive Vice President and Chief Financial Officer

There are really a couple of things in looking at our backlog that transitioned from the third to the fourth quarter. So part of it was just foreign exchange in terms of the strength of the U.S. versus Canadian dollar. And we do typically see that our scope to burn that goes down from the third to the fourth quarter, the fourth quarter being a little bit of a slower season for us. Those are the two large contributors. And we did note in our MD&A as well that we have now changed our contractual relationship on Trans Mountain, which was going to be a slightly bigger chunks of revenue within our backlog, but that relationship has changed such that now we've removed some of that out of our backlog. So that was really sort of the quarter-over-quarter change.

Benoit Poirier -- Dejardins Capital Markets. -- Analyst

And looking at the DSOs, obviously, very strong performance over the last year. How should we be thinking with respect to 2021, whether we should be more cautious in terms of DSOs? How should we be thinking on that front?

Theresa Jang -- Executive Vice President and Chief Financial Officer

Yes. I think we're feeling very positive about where we're at. Recognize we left our target at 90 days, and we probably could and should have tightened that up a little bit, but truly, we feel like we're in a really good space around the sort of 75-day mark. We're not anticipating a large move upward in DSO. We just wanted to make sure that we've got room for inevitabilities around things that are out of our control that may cause DSO to move in either direction.

Benoit Poirier -- Dejardins Capital Markets. -- Analyst

Okay. Thank you very much for the time.

Operator

And that does conclude the question-and-answer session. I'd like to turn the call back over to Gord Johnston for any additional or closing remarks.

Gord Johnston -- President And Chief Executive Officer

Great. Well, thank you again for joining us on the call today. We look forward to speaking with you in the near future about our continued progress. So thanks again. Have a great day and stay healthy. Thanks, everyone.

Theresa Jang -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]

Duration: 67 minutes

Call participants:

Gord Johnston -- President And Chief Executive Officer

Theresa Jang -- Executive Vice President and Chief Financial Officer

Jacob Bout -- CIBC -- Analyst

Chris Murray -- ATB Capital Markets -- Analyst

Frederic Bastien -- Raymond James. -- Analyst

Mona Nazir -- Laurentian Bank -- Analyst

Michael Tupholme -- TD Securities -- Analyst

Sabahat Khan -- RBC Capital Markets -- Analyst

Mark Neville -- Scotia Bank -- Analyst

Yuri Lynk -- Canaccord Genuity -- Analyst

Maxim Sytchev -- National Bank Financial. -- Analyst

Benoit Poirier -- Dejardins Capital Markets. -- Analyst

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