cdn.wsp-pb.comcdn.wsp-pb.com/viogve/q2-2017-conference-call-transcr… · Web viewI would like to congratulate all of our employees from around the world. Let me now turn to our

WSP Global Inc. Second Quarter 2017 Results Conference Call

WEDNESDAY, AUGUST 9, 2017 – 4:00 PM ET

PRESENTATION.....................................................

QUESTION AND ANSWER SESSION..........................

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TABLE OF CONTENTS

PRESENTATION Operator

Bonjour mesdames et messieurs. Good afternoon ladies and gentlemen. Bienvenue à la conférence téléphonique sur les résultats financiers du deuxième trimestre de l’année 2017 de WSP. Welcome to the WSP second quarter 2017 results conference call. I would now like to turn the meeting over to Isabelle Adjahi, Vice President, Investor Relations and Corporate Communications. À vous la parole. Please go ahead, Ms. Adjahi.

Isabelle Adjahi, Vice President, Investor Relations & Corporate Communications

Thank you and good afternoon, everyone. I first want to thank you for taking the time to join the call today. We will be discussing our Q2 2017 performance and we will follow our remarks by a brief Q&A session.

Joining me today are Alexandre L’Heureux, our President and CEO, and Bruno Roy, WSP’s CFO. Please note that we will be recording the call and we will post it on our website tomorrow.

Before we start I just want to mention that we may be making some forward-looking statements and the material factors or assumptions that we use to develop these forward-looking statements are set forth in our Q2 MD&A. Actual results could be materially different from those expressed or implied. And we do not undertake any obligation to update or revise any of these forward-looking statements.

On that note, I will now turn the phone over to Alex. Alex?

Alexandre L’Heureux, President & Chief Executive Officer

Thank you, Isabelle, and good afternoon, everyone.

I’m pleased with our Q2 and first half of 2017 performance. There are a few elements I would like to highlight. First, we ended the first half of the year on solid ground with all countries posting results in line with our expectations. Second, we posted organic growth in net revenues of 2.2% in Q2 and 6% for the first half of the year. We have now generated organic growth in net revenues in four consecutive quarters. Third, we improved our adjusted EBITDA margin globally year-over-year from 10.3% to 10.7%.

Also, for the second year in a row we ranked number in the ENR Top 225 International Design Firms ranking. We also received a number one ranking in transportation and number two in buildings, our two core sectors. Lastly, on a geographical basis, we rank number one in the U.S., number two in Europe, and number four in Asia-Australia. These are significant accomplishments, which demonstrates the depth of our technical expertise and are indicative of our global reach. I would like to congratulate all of our employees from around the world.

Let me now turn to our operational performance for each region. In Canada, organic growth in net revenues was once again positive for the quarter. Adjusted EBITDA margin before global corporate costs

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was at 12.8%, a significant improvement compared to the same period in 2016. High utilization rates and improved project delivery had a positive impact.

Our Americas operating segment posted solid organic growth in net revenues of 4.8% and adjusted EBITDA margin before global corporate costs stood at 15.6% of net revenues, once again the highest amongst our reportable operating segments. Our U.S. operation, on a stand-alone basis, delivered 5.2% organic growth in net revenues with the bulk of the growth stemming from a robust transportation and infrastructure market segment.

Our EMEA operating segment delivered organic growth in net revenues of 2.1%, in line with our expectations, while the Nordic operation posted another solid quarter, delivering organic growth in the mid-single digits. Our Swedish operations led the way for the region, increasing headcount and gaining market share across most market segments. The U.K. operations posted organic growth in net revenues of 1.5%.

Our APAC operating segment posted flat organic growth in net revenues for the quarter. Our Australian operation continued on their strong performance of Q1, posting organic growth in net revenue in the high single digits, propelled by solid gains in most market segments.

Finally, our Asian operation, mainly in China, experienced negative organic growth in net revenue stemming mainly from a slowdown in the building sector, negating the strong showing from our Australian operation. Full year organic growth in net revenues for Asian operations is anticipated to be flat as per our previously disclosed outlook.

Bruno will now review our Q2 2017 consolidated financial performance.

Bruno Roy, Chief Financial Officer

Thanks, Alex. Good afternoon, everyone.

For the first quarter, revenues and net revenues came in at $1.7 billion and $1.3 billion, an increase of 11.1% and 8.3% respectively compared to Q2 2016. We posted consolidated organic growth in net revenue of 2.2%, in line with our expectations for the quarter. Consolidated acquisition growth stood at 5%. The bulk of it related to the Mouchel acquisition made in Q4 of 2016. Foreign exchange impact on a consolidated basis had a 1.1% impact on our numbers.

Adjusted EBITDA for the period stood at $140.3 million, up $15.3 million or 12.2% compared to Q2 2016. Adjusted EBITDA margin reached 10.7%, up from 10.3% last year mainly due to the improvement in adjusted EBITDA margin from our Canadian operations.

Our effective tax rate was 28.6% for the quarter, higher compared to come to Q1 2017 mainly due to the increased profitability stemming from our U.S. operations where the enacted tax rate is the highest of all our geographical operations.

Adjusted net earnings were $65.5 million or $0.64 per share, up 17% and 14.3% respectively compared to Q2 2016. The increase was mainly due to growth in net revenues and improvement in adjusted EBITDA margins.

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Our backlog stood at just under $6 billion, comparable to Q1 2017 and representing approximately 10.3 months of revenues. On a constant-currency basis, backlog contracted slightly compared to Q2 2016 mainly due to the timing of contract awards. We anticipate calendar year backlog organic growth to be in line with our anticipated 2017 annual organic growth rate in net revenues between 1% and 4%.

We ended the year with a DSO of 82 days, ended the quarter, pardon, with a DSO off 82 days, comparable to Q2 2016 and higher than Q1 2017, in line with seasonality cycle.

For the second quarter of 2017 our free cash flow was negative $27 million compared to generation of cash of $6.8 million for Q2 2016. The decrease in free cash flow was mainly due to timing pertaining to income tax installment payments and payroll. As we have often mentioned, the free cash flow metric should be reviewed year over year as opposed to quarter over quarter as the timing of investment and capital expenditure initiatives and the management of working capital can have an impact on the shorter term.

Moving onto the balance sheet, our net-debt-to-adjusted-EBITDA ratio remained stable, coming in at 1.7x. At the end of Q2 2017 we had access to over $700 million in cash and available credit facilities. Subsequent to the quarter end we drew upon those facilities to finance the acquisition of Poch, a 730-employee firm based in Chile. Alex will provide more colour regarding this acquisition later in the call. We also declared a dividend of $0.375 per share to shareholders on record as of June 30, 2017, which was paid on July 17, 2017. With a 53% dividend reinvestment plan participation the net cash outflow was $18 million.

All in, we are very satisfied with the quarter and, more broadly, with the first half of the year. Alex, over to you.


Thank you, Bruno.

Before we open the line for questions I would like to make a few remarks on some global initiatives we undertook during the quarter and our M&A activities. You may recall that part of the global corporate cost included training to be funded from the CO fund initiative. During the quarter we officially created the WSP Project Management Academy and hosted our first court in the U.S. with 100 project managers. The feedback from our first wave of participants was very enthusiastic. This is clearly money well spent as our PMs play a pivotal role in advising our clients and ensuring quality project delivery and in mentoring our people. For the quarter and year-to-date periods, global corporate costs were comparable to the same period in 2016 and the run rate for the rest of 2017 remains in line with our outlook.

On the acquisition front, during the quarter we closed two acquisitions, one in the U.S. and one in Switzerland. These transactions are highly strategic. YR&G strengthens our building and sustainability expertise in the U.S. while Wirthensohn gives us our first entry point in a new geography: Switzerland. Subsequent to the end of the quarter we also increased our footprint in Latin America with the acquisition of Poch, a 730-employee professional services firm based in Chile and represents a significant milestone in our ambition to become a top-tier player in Latin America. All these acquisitions, combined with the ones we completed in recent years, are perfectly aligned with our 2015-2018 strategic cycle.

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When we initially presented our strategic plan, our ambition was to grow in specific regions, namely Canada, the U.S., the U.K., the Nordics, Continental Europe, as well as Australia, New Zealand, and Latin America. More than halfway through our strategic plan I am able to report that we are progressing according to plan. Since 2015 we have acquired 15 companies totalling approximately 6,000 people. The majority of these transactions were financed using are available cash and credit facilities. Our intent is to continue to deliver on that plan by partnering with likeminded firms in these target countries. With a strong balance sheet and access to additional capital, we remain focused, vigilant, and an active player in an ever continuing consolidating industry.

In conclusion, as we have closed the first half of the year in a strong note, we remain confident in our ability to deliver on plan, and hence reiterate our full year 2017 financial outlook provided on February 28, 2017. Now I would like to open the line for questions.

QUESTION AND ANSWER SESSIONOperator

À ce moment si vous voulez poser une question appuyez sur étoile puis le numéro un sur votre clavier téléphonique

At this time, if you would like to ask a question, please press star followed by the number one on your telephone keypad.

Your first question comes from the line of Mona Nazir from Laurentian Bank. Please go ahead.

Mona Nazir, Laurentian Bank

Good day and thank you for taking my questions.


Hello, Mona.


Hi. So, just firstly, I wanted to touch on the significant improvement in the Canadian margins. I’m just wondering that I see that you’ve put through a lot of efforts in the back half of 2016 and the efforts are starting to pay off. Is this a good run rate to use? I believe the margin was around 12.8%. Or do you expect that there’s potential upside to this? Thank you.

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No, I’d say for the time being with where we are at, I mean we’re halfway through the year, Mona, I’d say that that’s probably a fair assumption in terms of run rate for the time being. But, having said all that, I think you’re right to point out the humongous work that went into the second half of 2016 and I think the Canadian team did a very good job and they should be commended for their hard work.


Okay, perfect. And then secondly from me and turning to kind of the acquisition outlook, wondering if there are still kind of low-hanging opportunities when you guys were Genivar and you purchased WSP and then looking back at the Parsons Brinckerhoff acquisition, they were strategic and strong deals given that you purchased them at the bottom and then worked to build them back up. I’m just wondering if you’re searching for these type of targets. Is that search ongoing? And, if so, are you finding that such acquisitions are harder to come by? Or are you just thinking about gaining a presence in specific geographies and then just looking at all the targets there and on a purchased price to EBITDA basis or how you look at them? Thank you.


A couple of observations. First let me just comment on our platform. I mean we have a very strong platform right now and we always pride ourselves in the technical expertise that exists into our platform, and it’s certainly something that we nurture and we want to improve on a consistent basis. And therefore, I mean if we can find transactions that not only will make sense financially but, more importantly, would allow us to strengthen the platform, certainly we are on the look to do that, Mona.

Secondly, as you know, we have a strong balance sheet position today. I feel the company is doing well. We’re headed certainly in the right direction. I like the countries where we operate right now. So certainly, I mean if we want and we had the opportunity to grow in the regions where we operate, certainly we will look to do that. But also we’re going to be looking at the new geographies. And we identified the geographies where we wanted to grow in our last strategic plan.

So I talked about this earlier on. Certainly Latin America is one where we wanted to grow and explore and we’ve done that and we’ll continue to do that, but also there are many other places where we would like to grow. And I talked about this in the past certainly if we could grow the U.S., we’d love to grow the U.S., Central Europe, if we could, we would. We have mentioned the U.K., and I think the Mouchel acquisition is doing, ah, we’re very pleased with this acquisition. And also Australia/New Zealand, if we can grow that region at some point in time, we’d love to do that too.

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Okay, that’s perfect. Thanks.

Operator

Your next question comes from the line of Yuri Lynk from Canaccord Genuity. Please go ahead.

Yuri Lynk, Canaccord Genuity

Hey. Good afternoon. Alex, can you talk a little bit about the United States? You continue to have good numbers there. Is the driver of the transportation activity you’re seeing, is that the FAST Act kind of flowing through some two years after it was passed? And is that the type of timeframe that one would expect with any type of infrastructure package that might come in the U.S. next year?


A couple of observations, Yuri. I think we have, ah, the FAST Act is certainly helping. I’d say also that the state and local governments have taken a leadership role in getting projects awarded. So, historically, in the last few years, we saw that states were looking for funding to get projects done and now what we’re seeing is that there is more money right now at the state level and local level to undertake projects and to procure projects, and actually that’s certainly good news because we do a lot of work at the state and local level. We’re very well positioned.

And also I’d say that also the mindset in the U.S. has changed as well within WSP. Since the combination of Parsons Brinckerhoff and the WSP historically back in 2014, I think really the mindset has been to engage the organization and growing the business in the U.S. So we’ve made a couple of changes and the team, again, in the U.S. has done a very good job at changing the mindset and have more of a growth mindset. So I would say that, yes, there are external factors, but also the leadership team in the U.S. has done a very good job at putting the right actions in place to create a growth environment within our company.


Okay. Are there any other end markets in the U.S. that you’re not in in a big way that you find attractive?

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Sure. I think right now the U.S. market, our U.S. business is the size or slightly bigger than our Canadian operation and, as you know, the U.S. market 10 times the size of the Canadian market, so obviously, de facto, if we could grow the U.S. we would like to do it. So there are many places where we would like to either continue to grow or increase, one being environment, but also certainly in transportation. I mean we have a strong presence in many states but there are other states where we believe we could grow. And equally, in property and building, we have a very strong presence, but I think there’s a lot to do on that front in the U.S. And we’ll look to grow this sector as well in the years to come.


Okay. The second and last one for me, can we just talk about free cash flow a little bit. The last two quarters have been pretty big investments in working cap. I understand there’s some tax timing differences but can you talk about WIP and how that stands and whether you’re pleased with that? And your receivables sound like they’re okay given the DSO level. So anything else that’s contributing to the investment in working cap.


Our DSO at 82 days is exactly where we expected them to be. So don’t be surprised it’s there and it’s in line with seasonality. Over and above the income tax installment payment that we mentioned there’s also simply one more pay period in the second quarter, so we had seven pay periods this year instead of six, and that’s a $60 million difference right there. So that’s why, as always, we recommend looking at free cash flow on trailing 12 months. And if you look at it that way you’ll see that it has a very nice upward-going slope.


And WIP? You’re happy with WIP?


Yes. No issues with WIP as of now.

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Okay. Thanks, guys. I’ll turn it over.


Thank you, Yuri.

Operator

Your next question comes from the line of Jacob Bout from CIBC. Please go ahead.

Jacob Bout, CIBC World Markets

Good afternoon.


Hello, Jacob.


Just going back to the U.S. market, so strong organic growth there, I think you said 5.2%, and you’re talking about increased bidding activity. Does that mean we can expect higher organic growth rates in following quarters?


It’s difficult to predict. I’d say that, Jacob, right now we have some momentum. I think the team is working extremely hard to win their share of the work, but there’s positive momentum right now in the U.S., so I’d say that, you know, fingers crossed that this will continue and hopefully for a long time, but certainly for the remainder of the year we’re feeling good about the U.S. business.


And can you comment on the levels of competitiveness in the U.S.?

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Well, I’ve always said that we compete in an industry with players that I have the most respect. I mean we’ve always—there are a lot of good firms within our industry. So it’s competitive in the U.S. but it’s competitive everywhere.

But we’re also, we like competition and we were competing hard to win, but it’s a competitive market. There’s no doubt about this. But I could say the same in Canada, same thing in the U.K, everywhere we operate. We are a global organization and certainly what you see is the global players are playing in all those markets, and I think that’s a statement or why we believe in the consolidation movement and why we believe growth is a must in our industry.


No reason to suspect there’s going to be increased pressure on margins going forward?


Look, it’s difficult to predict what the future will look like. Having said all that, I think we’re doing a good job at maintaining and actually increasing our margin level at WSP at this point in time.


Maybe just lastly, backlog flat to down quarter on quarter, year on year; how much should we read into that?


Well, Bruno can take it.


Not too much is the answer. There’s simply a bit of timing on projects we confirmed right after the quarter, a few large projects in the US, a big win in Australia as well, that had they closed a few days before backlog would’ve been higher. But, again, nothing to worry about here. It’s where we expected it to be.

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Thank you.

Operator

Your next question comes from the line of Benoit Poirier from Desjardins. Please go ahead.

Benoit Poirier, Desjardins Securities

Good afternoon, gentlemen. I would like to circle back on the free cash flow. We understand there’s always seasonality in the free cash flow so just wondering about your confidence or expectation in terms of free cash flow conversion for the year. And maybe also if you could provide some colour about the working cap but for the total year, whether it will be a negative a bit or what type of magnitude we could see in terms of movement.


Okay. In terms of conversion, we’re always shooting for over 100%, and that’s not going to be different. So that’s a number we’re going to stick to. And we made it last year at 123 I think. So, again, plus or minus one pay period makes a difference, but we’re shooting for over 100, as we always do for conversion.

And, look, for overall working capital, look, we’re always working to bring that down across geographies and there’s a number of initiatives in place in our different geographies to go out and make sure we invoice faster and collect faster. So, as usual, we’ll be working to bring that down. And if you look historically, we’ve been reasonably good over the years at bringing the average down, and this year is not going to be different. And, again, if you go back to our guidance on this one we’re, again, we’d mentioned we’d be between 80 and 85 days and there’s no reason for us not to be in that range.


Okay. Perfect. And just in terms of, Bruno, in terms of acquisition and integration costs, I know the guidance is still $15 million to $25 million for the year but year to date you’re only at a little bit less than $7 million, so just wondering if we should expect a higher number in the second half and any colour on what would be the key driver.

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No, no changes since our outlook on that one. So you can rest assured that it will be somewhere between $15 million to $25 million.


Okay. So basically more cost to be coming in the second half?


Yes.


Okay. Perfect. And when we look at the U.K., it seems a little bit softer due to uncertainties around the Brexit, so any colour for what we should expect for the rest of the year, whether it will influence the EMEA growth going forward?


Look, Benoit, I mean we’re all a spectator around this. I mean the Brexit has certainly brought its load of uncertainty. Having said all that, I think our business is doing well. The Mouchel acquisition was timely. The public sector is doing well and holding on. Clearly, and we mentioned that in past quarters there was a little bit of uncertainty around the private sector and around the London area in the last few quarters. We’ll monitor this closely.

There was the election also that took place during the quarter. That brought a bit of uncertainty but also, more importantly, some questions around the commitment of the government to reinvest in infrastructure. But I think they did a good job at providing comfort around this. So we’ll monitor this closely but the operation grew organically in the quarter so I’m not prepared to get, ah, to cry wolf just yet. I think things are okay right now.


Okay. And maybe last one for me, U.S. infrastructure spending, you provide a bullish outlook obviously with a lot of opportunities, you showed very strong numbers, so it doesn’t seem that you or the sector is

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having issue with respect to the funding of public works. Am I right, Alex, to say that you’re not impacted so far on the funding side?


No, so far I think it’s, you know, we’re seeing a bit of... We mentioned that again in past quarters. I mean in Canada we had predicted a very busy year, bidding year for our Canadian operation, and that turned out to be true. Our transportation business is busy bidding. So I agree with you, Benoit. Right now I think we’re in a place where, fingers crossed again, things can change rapidly, but the funding doesn’t appear to be an issue. Or is not an issue.


Thank you very much for the time.

Operator

Your next question comes from the line of Maxim Sytchev from National Bank Financial. Please go ahead.

Maxim Sytchev, National Bank Financial

Hi. Good afternoon.


Hello, Max.


Hey, Max.

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Just a quick question on China. It looks like buildings really sort of fell off a cliff. I was trying to see if you can provide some incremental data points. And also just a bit surprised by the deceleration, because it was quite positive over the last couple of quarters and right now really slowed down. So, any colour there please.


No, again, it’s been, China property has been in a difficult place since the start of the year. Not really falling off a cliff, but it’s been difficult. There’s been also in those numbers a few less days as well because of Hong Kong statutory holidays that makes a bit of a difference. But, look, it’s a difficult market, especially the market where we play, and we tend to serve the higher-quality developers, both those based in Hong Kong and those listed on the mainland, and those names have been less busy than in the past and, as such, our numbers suffered somewhat. But the team there is working very hard to not only continue to build our presence with these folks but also diversify toward infrastructure, and this is why, for instance, we were so delighted to win the work on the KL to Singapore high-speed rail project. We want to rebalance the portfolio towards that over time and that’s our local strategy for the foreseeable future.


And to echo what Bruno said, Max, if you look back two years ago, 24 months ago, I mean our split between infrastructure and property and buildings was probably 90/10, and now we’re down to 70/30. So I think the team has done a very good job at trying to diversify the business and build diversity within the revenue mix. So that’s ongoing, that’s ongoing work, but I think the team, as Bruno said, works extremely hard to hold the numbers and so far it’s been, we’ve pleased with the performance.


eah, no, I mean, I appreciate that. I was just wondering, you know, like one of the things that you’ve done I think very well in the U.K. was adding some infrastructure-related exposure through M&A. Is there something that could be considered in that particular geography? Or right now you’re happy with the footprint and just trying to manage what you have in terms of sort of backlog and employees?


Well, more specifically around Asia, I mean I think the goal right now is to do that organically, Max. So continue to diversify our platform. And you know we’ve been quite vocal about this. What we want is to have a balanced portfolio, both from the private and public sector but also from a fixed price variable price

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point of view, but also the size of the project mix and the geographies where we operate. And, last, the end markets. So, on a constant basis we’re trying to diversify and trying to optimize our platform such that we have a very resilient platform and a resilient business. And if clearly we have a real opportunity to do that, we’ll do it, through acquisitions but also organically.


Okay. Thanks for that. And the last question I had, I know that, obviously, the transaction hasn’t closed yet, but Jacobs and CH2M Hill potentially combining in the U.S., any sort of initial thoughts if that could change the competitive landscape? Because I believe they will be sort of the largest pure consultant in the U.S. for sure. Any comment there?


Well, first let me caveat, not caveat but (inaudible) by stating, first of all, it’s very difficult for me to comment on a transaction that is taken place by two of our competitors and yet the transaction hasn’t closed, so let me just say that to start with.

Having said all that, you know, it’s not like a new players entered the market. CH was a significant player in the U.S. market, so is Jacobs. And actually I see this positively. I mean when the URS and the AECOM transaction took place, it always creates some opportunities for the other players, and it’s similarly in this case, I believe, that if this transaction is consummated it will be, it’s a good thing for them, I’m pretty sure, otherwise they would have not done it, but also I suspect it will create opportunities for us. So, to me, I think it’s not like there’s a new player coming in the U.S. market and things have changed dramatically.


Yeah, no, that makes a lot of sense. Thank you very much.


Okay. Thank you, Max.

Operator

Encore, pour poser une question appuyer sur l’étoile suivit numéro un sur votre clavier téléphonique.

Again, to ask a question, please press star followed by the number one on your telephone keypad.

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Your next question comes from the line of Frederic Bastien from Raymond James. Please go ahead.

Frederic Bastien, Raymond James

Guys, you have ambitions to become a top-tier player in Latin America. You took some steps there last month by buying Poch. What else needs to happen to get you to that sort of size or that scale that you aspire to be?


Well, certainly have a good organic growth plan, making sure that our newly acquired company, Poch, is really, you know, we start collaborating with this team day one. That we introduce Poch to our network. That we make sure that they get access to the best expertise in our network to compete locally. That’s our model. So that’s something that has already started. But also, Fred, I think that there will be some more opportunities for us to potentially do some acquisitions in the region. And we’re very selective in the countries where we wish to grow but I’m pretty sure in the not-so-distant future and perhaps in the longer term we’ll be able to hopefully do more acquisitions and grow the region.


And then just to confirm, which jurisdictions are you, do you continue to be interested in and those that you may not be?


It’s a good question. What we had said when we launched our strategic plan is we would continue to grow Colombia. We would want to explore Chile, Peru, and Mexico. So last year we made an acquisition in Mexico, so that was good news and we’re very pleased with the DITEC acquisition. It’s a small structural firm working the private sector but we’ve been extremely pleased. And we’re getting to know the market so we’re venturing in Mexico slowly but surely. And also we had said Peru and Chile and I spent some time in Chile and had entertained good discussions and a good dialogue with Poch over the last few months and got convinced that this is a good country, a very sophisticated country with a good procurement process with good engineers. I think Chilean engineers are well known around the world. They’re known to be very strong technically. So we were extremely pleased with this acquisition. So I’d say for the time being that’s where we want to play in Latin America. We’re not, um, we get the question often I mean if we would like to grow Brazil, for instance, but for the time being, this is not on our radar.

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Perfect. That’s all I have. Thanks.


Thank you, Fred.

Operator

Your next question comes from the line of Michael Tupholme from TD Securities. Please go ahead.

Michael Tupholme, TD Securities

Thanks. Good afternoon.


Hello, Michael.


Alex, there’s a comment in the MD&A about experiencing lower utilization rates in certain regions where you’ve been ramping up the headcount in anticipation of some strong growth, and I do remember you were talking about hiring in the first quarter in Australia. But I’m just wondering were there other regions as well? And I guess what I’d like to understand is where are those regions where you’ve been doing that and how should we think about an improvement in utilization and therefore benefit in margins going forward.


If you don’t mind, Michael, I’ll let Bruno answer the question.

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Yeah, on this one, look, the region where we’ve experienced the most net people inflows are (inaudible) in the Nordics. We’ve added 500 people over the first half of the year. And obviously people have to be ramped up and trained and then deployed on client work, so that’s why utilization took a little dip.

But, again, nothing, ah, I guess it’s the ransom of glory I guess when you do well and these numbers are going to suffer short term, but looking at the full year we are very bullish on the Nordics, as we have been for past five years. It’s been a tremendous story for us in terms of organic growth. So you can assume that utilization and then margin is going to catch up over the course of the year.


Okay. So that’s EMEA. And was there any of that going on at all in APAC or was it mainly offset by what’s happening in China?


That’s exactly it. So not as much in Australia, but the real big inflow when we look at our global numbers has really been the Nordics. And it’s 500 people. I mean it’s a very meaningful (inaudible).


Okay. That’s helpful, thank you. And then I guess for either of you, the question has been asked a few times about the U.S. market and infrastructure activity levels; have you started to see much benefit from some of the ballot initiatives and bond measures that were approved as part of late last year’s election or is that still something that can be a positive for you going forward?


No, I think it could be positive going forward. I think we’re only six months into the voters voting and approving those ballots, so I think it’s a bit early days. But hopefully this will bode well for the future.


Okay, perfect. Thank you.

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Operator

There are no further questions at this time. I turn the call back over to the presenters.


Okay. Well, thank you for attending this call and I would like also to thank you for your support and looking forward to our next call in November. Thank you very much. Bye-bye.

Operator

This concludes today’s conference call. You may now disconnect.

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cdn.wsp-pb.comcdn.wsp-pb.com/viogve/q2-2017-conference-call-transcr… · Web viewI would like to congratulate all of our employees from around the world. Let me now turn to our