Thank you. Good afternoon, everyone, and welcome to SNC-Lavalin's 2016 third-quarter earnings conference call.

Our earnings announcement was released this morning, and we have posted a slide presentation on the investors section of SNC-Lavalin's website, which we will refer to during this call. Today's call is also being webcast.

You can find the link on our website, and a replay will be available within 24 hours. Within us today are Neil Bruce, President and Chief Executive Officer; and Sylvain Girard, Executive Vice President and Chief Financial Officer.

Before we begin, I would like to ask everyone to limit themselves to two or three questions to ensure that all analysts have an opportunity to participate. You are welcome to return to the queue for any follow-up questions.

I would also like to remind you that, as detailed on slide 3, certain statements made during today's call and slide presentation about the expected future events and financial results may be forward-looking; and, therefore, subject to risks, uncertainties, and assumptions, which are described in our financial documents. Forward-looking statements represent management's expectation as of today, and accordingly are subject to change.

We disclaim any intention or obligation to update any forward-looking statements, except as required by law. I would now like to turn the conference over to Neil Bruce.

Merci, Denis. Good afternoon, everyone, and thank you for joining us today.

On today's call I will briefly review our Q3 results and discuss our segment performance and outlook. I will then ask Sylvain to talk about the Q3 results in more detail.

Let me first start by commenting on our public announcement on September 29, where we announced that we were updating our outlook for fiscal 2016, because of this outlook change was due to the most recent evaluation and analysis of our project portfolio, where we had established and expected to record in the third quarter on favorable costs on revenue re-forecasts on two oil and gas projects in the Middle East. As you can see from our results, we recorded an adverse charge of CAD117 million gross margin against these projects, which was partially offset by very good performance by the rest of the oil and gas segment, leaving us with a net loss in the third quarter of CAD28 million.

Discussions are actively ongoing to attempt to resolve the commercial issues in these contracts, and we're working hard to attempt to be able to reverse some of these charges in the future. We have worked with this client for a number of decades and have a solid relationship.

And I can assure you that while commercial discussions must continue, the client has been very professional on all fronts. If you exclude this setback, Q3 results were very good, as the business generally produced really strong results in gross margin and in G&A reduction.

We also expect that the fourth quarter will return to a more normal run rate. The reconciliation of our Q3 results are in Slide 11.

And you will see that if we exclude from this quarter the two exceptional items in oil and gas and corporate G&A, our Q3 adjusted EPS from E&C would have been very good. Sylvain will walk you through the details within the financial section.

I want to finish this section with explaining our revised outlook. We are building an open and transparent organization where no surprises is our goal.

When we have this sort of setback, we are committed to making sure that the market has all appropriate information. Larger projects within an E&C business combined with quarterly reporting requirements allow more leeway in instances like this.

Therefore, any progress in our commercial discussions and project forecast improvements will go straight to the bottom line. Let's now look at each of our segments, starting at slide 5.

Our oil and gas sector had strong revenues of 1 billion in the quarter, its highest quarter of 2016. And the backlog remains strong at 3.6 billion, despite the fact that the Gorgon project is now nearing completion.

We continue to see many high quality prospects and opportunities ahead, particularly in the Middle East, Asia Pacific, and the United States. We're also continuing to see some smaller opportunities in Canada in the downstream-related activities.

Turning to Slide 6, we're in the final stages of negotiations of several projects from our mining and metallurgy sector, which we expect to announce shortly. This is reassuring, given the commodity market remains challenging.

And it gives us confidence that our backlog could return to levels higher than what we saw at the beginning of the year. This sector has also been very good at rapidly adjusting its G&A expenses to match the new level of revenue, and this is proven by its 15% EBIT margin in Q3.

Moving to slide 7, the power sector continues to do well, sustaining its EBIT margins and backlog. We're pleased that we have been recently awarded a further contract in the highly attractive nuclear sector, supporting Bruce Power in their long-term refurbishment investment program.

We're also pleased with the agreement in principle we signed in September to form a new joint venture with China National Nuclear Corporation and Shanghai Electric Group Company, to develop, market, and build the advanced field Candu reactor, known as the AFCR. We believe that this could lead to construction of the world's first two AFCRs in China, and possibly subsequent builds in that country and around the world.

This technology can use recycled fuel from light water reactors to generate carbon-free electricity without needing any new natural uranium fuel. We're also pursuing a number of opportunities in the renewable sector, and anticipate announcing some project wins in the future.

Now turning to infrastructure segment on Slide 8, we're very pleased with the EBIT margin improvements and execution performance of this sector. Most of our major projects are progressing ahead of expectation.

We continue to see many opportunities throughout Canada: here in Quebec, and in Ontario. We're also pleased to be shortlisted for the George Massey Bridge in British Columbia.

This adds to our list of over 1 billion projects that we are shortlisted for, with the Finch West LRT and the Gordie Howe Bridge projects. We expect that clients will announce the preferred proponents for each of these in 2017, creating opportunities for us to secure sizable work in 2016, 2017 in this segment.

Total backlog for the infrastructure segment was $5.3 billion at the end of the quarter, in line with Q2. Also in infrastructure, we confirmed media reports in August that we received an offer for our entire operations in France.

Therefore, we have classified these as under held for sale in our financials. So I would like to reconfirm that we're considering the offer, as it is consistent with our efforts to align our activities with our global core business strategy and our operational excellence program.

We have started a consultation process with a committee of employee representatives in according with legislation in France in anticipation of a potential sale. These operations in France, spanning capital, operations and maintenance, and our infrastructure and construction sectors, are expected to be disposed of by the end of 2016.

These operations have not generated the expected profitability for the last few years. Note that this represents a backlog of approximately $460 million at the end of September; $330 million for O&M, and 130 million for I&C.

And lastly, turning to capital on slide 9, the new structure that we're planning to put in place for a certain number of our mature North American concessions, excluding Highway 407, is progressing well; but to be frank, it is taking a lot longer than we had originally expected. We have received very strong interest from potential investors, and we're working through several proposals.

But we want to ensure that we have the right structure to maximize value from these high-quality concessions, and we are prioritizing this over speed of completion. We expect that the discussions with potential partners will continue well into the fourth quarter.

We will update the market as soon as confidential negotiations are complete. As for Highway 407, we are very pleased again with their quarterly results.

Revenues increased by 16% in Q3 2016 compared with last year, and their EBITDA increased by 20% for the same period. We were also pleased with the 11% increase in quarterly dividends.

Before I hand over to Sylvain to discuss slide 10 in more detail, I would like to comment on our SG&A backlog and operational excellence. Our total SG&A expenses decreased by 32% in the third quarter compared to Q3 2015.

This does include a favorable impact from revised estimates on legacy site environmental liabilities and other asset retirement obligations. If we exclude this $33 million favorable impact, SG&A expenses for the quarter still decreased by 16%.

On the same basis year-to-date, SG&A expenses were 95 million lower than the corresponding period last year, positioning us to deliver well above our $100 million reduction target for the full year. This is mainly the result of the successful implementation of the STEP Change program launched in Q4 2015, and the ongoing operational excellence programs launched at the end of Q1 2016.

Our operational excellence program continues to progress well, with many identified initiatives at various stages. As you're aware, some have been completed, such as the IT outsourcing.

Some are in progress, such as the sale of non-core businesses; and other initiatives will be launched soon. As another example is a review of our owned real estate portfolio.

This initiative is to maximize the use and management of our office space. We're exploring many options, including asset sale, or asset sale and leaseback of our head office building and adjacent surplus land.

With our employees spread out over seven locations in Montreal, our goal is to regroup into fewer locations and modernize our workplace. We remain committed to maintaining our head office based in Montreal when the sale of these assets move forward.

As part of operational excellence, we also continue to deploy efforts throughout our organization to ensure consistency of execution so that we can deliver sustained earnings improvements. Our 2017 target remains consistent, delivering an adjusted E&C EBITDA margin of 7%.

We will continue to take all additional measures throughout the rest of the year, if required to ensure we position ourselves to meet this goal. Other good news in the quarter was our backlog, which closed at just under 12 billion, and we remain confident about its increasing quality with key customers.

In summary, after several quarters of sustained earnings improvements and cost reductions, we encountered a setback in Q3. Despite this setback, our 2017 target and acquisition strategy will remain the same.

We are pleased with our oil and gas, power, and infrastructure results. We have a strong balance sheet and remain confident about the increasing quality of our diversified backlog.

Therefore, we are maintaining our guidance with regards to the adjusted E&C EPS of CAD1.30 to CAD1.60. The range is still wider than normal, as it is still possible to secure a better forecast on the two oil and gas projects discussed earlier.

On our next quarterly conference earnings call, we will discuss our 2017 outlook. I am confident as of today that due to our current backlog, our list of prospects, and our operational excellence program, that we will be delivering further adjusted E&C EPS growth.

With that, I'll pass the call over to Sylvain to go over our financial results in more detail.

Thank you, Neil. Good afternoon, everyone.

Continuing on slide 10, E&C revenues for Q3 2016 totaled CAD2.1 billion, lower than Q3 2015, reflecting a decrease in the mining and metallurgy segment as it continues to be affected by a lower level of activity due to lower commodity prices; as well as in infrastructure, due to the completion or near completion of certain major projects. E&C SG&A expenses in Q3 2016 amounted to CAD129 million; CAD73 million below Q3 2015.

As mentioned earlier, this is mainly due to the successful implementation of the STEP Change program and the ongoing operational excellence program. In addition, as stated by Neil, we benefited from a favorable revised estimate of 33 million on legacy site environmental and other asset retirement obligations during the quarter.

Every sector in corporate delivered a decrease in G&A, which more than offset our 12% increased investments in business development activities. Also note that our E&C SG&A over E&C revenues came in at 7.7%, excluding the impact of the CAD33 million.

That is 0.8% lower than Q3 2015, despite a decrease in volume. The adjusted EBITDA margin and amount from E&C was lower compared with Q3 2015, reflecting the negative segment EBIT from oil and gas.

Adjusted net income from E&C in Q3 2016 was CAD24 million or CAD0.16 per diluted share compared to CAD71 million in Q3 2015 or CAD0.47 per diluted share. Net income from capital was CAD43 million in Q3 2016 compared to CAD191 million in Q3 2015, as in Q3 2015 we recorded a net gain of CAD146 million on the disposal of our investment in Ambatovy.

Our cash balance and backlog remained strong at the end of September 2016, with a balance of CAD0.9 billion and CAD11.8 billion, respectively. Now turning to Slide 11.

This table provides a breakdown of our Q3 adjusted net income from E&C, and also isolates both the negative CAD117 million in oil and gas and the positive CAD33 million in G&A. We also see that if we exclude the impact of these two items, which represents CAD0.35 EPS, our Q3 adjusted EPS would have been CAD0.51 instead of CAD0.16.

This would have represented a very good quarter, and this is mainly due to a strong EBIT in the quarter from the rest of the oil and gas business and from infrastructure. Which brings me to Slide 12.

We see that the oil and gas segment had a negative EBIT of CAD28 million in Q3 2016. As just mentioned, this decrease was mainly attributable to the CAD117 million impact on gross margin due to unfavorable costs and revenue re-forecasts.

But this was partially offset by a strong performance and favorable re-forecast on other projects, as well as lower SG&A expenses. We can also see that the infrastructure and construction segment delivered CAD29 million of EBIT in Q3 2016, which represents an EBIT margin of 6.6%.

This was lower than the Q3 2015 due to a larger number of favorable re-forecasts in 2015. If we exclude these, the EBIT was in line with Q3 2015, but on a lower revenue level.

Note that the Q3 2016 EBIT margins of 6.6% for I&C, and 8.5% for O&M, was the highest quarterly EBIT margins of 2016. This improvement is the result of improved project efficiency and execution, lower G&A, and favorable business mix.

Now moving on to Slide 13. Our revenue backlog at quarter-end remained solid at CAD11.8 billion.

Our backlog was composed of 45% in reimbursable contracts and 55% as fixed-price contracts, in line with Q1 and Q2 2016. Bookings for the third quarter were CAD1.3 billion, totaling CAD5.9 billion for the first nine months of 2016.

Overall, we have maintained a high-quality, diversified backlog. Note that we expect that our total backlog will decrease at the end of December 2016, as we expect to close the sale of our real estate facilities management division and French operations by them.

These two subsectors represent a total backlog of CAD940 million as at September 30, 2016. Turning to Slide 14.

Compared to the same nine-month period last year, we have been able to reduce our operating cash flow usage. Year to date, our operations essentially used $134 million in cash compared to $759 million in cash in 2015.

The 2016 usage is primarily driven by an increased working capital requirement of approximately $215 million on certain major projects compared to $698 million in 2015. We also paid less tax and received higher dividends from our capital investments.

We expect that the situation will continue to improve by year-end. Unfortunately, the unfavorable cost re-forecast on the two oil and gas projects we discussed earlier will negatively impact Q4 cash flows.

Nevertheless, we still aim to close the year with a slight positive or flat operating cash flow contribution. On the right-hand side of the page, we provide a simplified cash balance analysis which highlights the main variances for the first nine months of the year.

We see that the cash generated by the disposal of capital investments, mainly Malta, was more than offset by various outflows: particularly $114 million of project-related capital expenditures, $60 million of net increase in receivables from long-term concession arrangements, $328 million of repayments for project financing loans, and $117 million of dividends to shareholders. Note also that we have $70 million of cash presented as held for sale.

Now let's turn to Slide 15, which presents our financial position. Other than the variation for cash that was explained on the prior slide, we see a resulting decrease of $1 billion in current liabilities.

This decrease is mainly due to working capital requirements on ongoing projects, repayments of project financing, and a decrease in restructuring provisions. Lastly, note that our recourse debt to capital ratio remained low, at 9%.

Now moving on to the last slide, Slide 16, we have maintained our 2016 outlook, which is an adjusted diluted EPS from E&C in the range of $1.30 to $1.60. The range is wider than we would have expected at this time of the year.

The main variable between the low end and the high end of the range is whether we are able to secure better forecasts on the two oil and gas projects in the Middle East. If such an outcome does not materialize before year end, we would expect to close the year between the low end and the middle of the range.

This concludes my presentation. We can now open the lines for questions.

Can you comment, Neil, on the outlook for the oil and gas segment going into 2017, with OPEC production cuts, or without production cuts? Which scenario do you see being more positive for SNC, or could be more negative?

Yes. Good afternoon.

So, in terms of the outlook, we are maintaining our position that we're really quite positive about the outlook, certainly for 2017. As you see, our backlog is 3.6 billion.

And the key component there is that that's also with the Gorgon project effectively winding down rapidly to completion by the end of this year. So, a number of people a while ago were concerned about where our backlog would be and then subsequently our revenues, once Gorgon finished.

So, I think we're able to demonstrate that we've maintained, give or take, we've maintained the backlog level without Gorgon being a feature within the backlog. In terms of the production cuts, it's pretty difficult to translate any of that into our business, certainly in the short term.

We know that a lot of the work that we're doing in the Middle East is about maintaining the production potential of the work that they're doing. So I really don't see that being affected.

And, generally, in terms of capital allocation of the large oil companies, then once we see a little bit of that picking up, then I would expect the market to pick up a bit. But that's highly unlikely, I think, to happen anytime soon.

Okay. But going into 2017, so even when Gorgon finishes up, with the backlog you have now, you feel confident in the revenue run rate for 2017 at this point?

Yes, we're pretty confident. Yes.

Okay. And then you made some comments about taking further action, if required, to get to the 7% EBITDA margin in 2017.

Would that include more SG&A savings steps, or is that more shrinking to grow by maybe disposing of other business units?

No. I think we've said previously that our intent is not to shrink in order to increase the margin.

We have spent a lot of time and effort through our strategy group looking at our core businesses, and looking at businesses that have a long-term, sustainable future within the group and contribute in some way to other things that we do; hence, looking at the disposal of the facilities management piece, and, in fact, the French operations. So we're certainly, we're not looking at that.

But in terms of taking actions, that's a really reaffirming that under operational excellence, we are looking at absolutely everything that we do, whether it's delivery to customers through projects, or how we do IT, or how we do tax, or how we do insurance or, every single thing; how we hire people, is it the slickest way possible? So basically all we're really saying is that this is a continuous improvement process where we will continue to do all the right things for the business in order to get to the right place.

Okay. And just flipping to infrastructure, just wondered, in terms of the outlook for 2017, it looks like SNC is shortlisted on a number of large projects.

In terms of the revenue impact that those might have if a win is awarded, are we looking more at 2018 for a build in infrastructure revenue from here? And what is the margin impact of maybe the bidding activities going on in 2017?

I think again it's sort of, it's a good question, and it builds on some of the things that we've talked about before. I think 2017 is very much about a bidding year.

I don't think there will be many projects that will actually commence in 2017; they will be 2018, 2019, 2020. But I think we are in a fairly unique and fantastic position in this market, because we've got CAD5.3 billion worth of backlog in infrastructure that is going to keep us really busy on some key projects -- Eglinton, Champlain, and the like, through next year -- whilst we bid a number of projects.

And when we look at the projects that are slated, then they are also in our sweet spot of rail and transit, in particular across Canada, with a number of key projects that are -- certainly the bidding process is well under way. So I think if anybody -- if people are struggling for revenue in 2017, then they're going to have to wait until 2018 for that to kick off.

But we're really not in that position. And, ultimately, it also dovetails really well in terms of some of our experienced staff moving off of what we've already got into some of these new projects.

I just want to follow up on Sara's question on the revenue outlook for the E&C business, and I guess margin outlook. Is it possible -- given that we're entering the year, the backlog -- barring any big bookings in the fourth quarter -- backlog will be down a little bit versus the prior year?

And then, rough math, the facilities management business and the French asset disposal, so you could be looking at over CAD500 million of revenue that goes away. So, is it right to be thinking about a 5% to 6% revenue decline, given all of that?

And then secondly, what was the EBITDA attached to these assets?

Well, first of all, as I think you understand, we're probably not going to give revenue numbers on top of a margin target number. So I think we are seeing some ups and downs across the various sectors.

Clearly, we're confident about oil and gas. We see a bit of a pickup, but it's minor in the grand scheme of things, around mining.

Nuclear is a great business. O&M is a great business.

And then the other sectors, probably a bit more pressured and flat. On the piece around the businesses that we're disposing of, then basically they were either zero margin or slightly loss-making businesses.

So, that's the rationale for disposing of them.

Right. Yes, no.

Just trying to get the impact, because there's a lot of moving parts at this point. But it certainly looks like margin-accretive moves.

The last one for me just on the oil and gas business. Am I thinking about it correctly that -- when I'm thinking about the margin going forward with these projects, they are continuing on and they will be carried at zero margin, so they will weigh a little bit on the EBIT margin that we'll see reported going forward.

Is that how to think about it?

Well, they will until we -- they will, unless of course we resolve some of the commercial items that we discussed earlier, which we are reasonably confident that we will make progress on that. The timing of it is a little bit more unsure.

Okay. Okay, thanks very much.

Perhaps you can talk a bit about your appetite for future acquisitions. Maybe talk specifically, within infrastructure, how you are feeling about your product offering.

I think our appetite for acquisitions hopefully is clear, which is we've had a year of delivering consistent results. Certainly Q3, we've had the issues on this project.

But overall we don't really see that affecting our strategy and long-term growth, which includes M&A. So we are constantly looking at opportunities across the business that will either increase our presence in certain sectors or certain geographies.

Pretty difficult to get into discussions about anything specific, but we are actively looking at that. And if the right thing comes up that is going to add value and be accretive, then we are certainly in a position to move forward on that now.

Second question maybe would be on the power division and an update on [technical difficulty] yesterday you were quite upbeat on that. Can you just talk a bit, A, how things are going.

And then B, maybe talk a bit about margin swings as you move [technical difficulty] project. Are they relatively consistent or will that change as you [indiscernible]?

I'm really sorry. I didn't -- you're quite faint.

I didn't quite catch right at the very beginning piece. I know you were talking about power.

Yes, we were talking about power and the work that's going on at Darlington.

Oh, at Darlington; right.

Maybe just give us a bit of an update there, and then talk a bit about margins, and specifically how that will swing through the life of that project.

Well, I think Darlington is progressing pretty much to plan. We're really pleased to be involved in that technically challenging project.

But it's a fantastic project and we're really pleased to be part of that. And it's going well.

And of course not at the same stage, and certainly at a slightly different configuration, really pleased to also be helping Bruce Power in their aspects within the nuclear piece. If we look at the nuclear sector as a whole, it tends to be a sector that takes a lot longer to get things started.

But there's a lot of things coming to fruition now. And as I mentioned, we are very optimistic about the whole Candu technology piece and its application, both potentially with our partners in China, the potential of it in Argentina, and also within Europe.

So, we are, of all of the sectors we're in terms of potential growth and high-tech quality work for key customers, key, quality customers, I really, really like the nuclear space. I think that's offering fantastic opportunities to us.

Maybe I could just re-ask that margin question another way. If we take a look over the past 12 months, the EBIT margin has been pretty consistent.

With some of these projects coming up, do you expect [technical difficulty] be much volatility in that margin as you move through that project?

I think, generally, we know that more consulting engineering services margin does tend to be higher than large project lump sum execution work. So, we do expect it to move.

The more we do, we expect it to move more in that direction.

I think if I can add, Jacob, on the nuclear, you are right, and what Neil described is correct. There's a bit of a mix there.

But overall for power, the mix will be favorable as Darlington ramps up because it's offsetting other revenues ramping down at a lower margin.

Just coming back at the booking on the oil and gas and mining, obviously below expectation; book-to-bill soft in Q2, Q3. So it seems that you are confident that we could see some nice projects on the mining side.

Just was wondering what visibility do you have going into 2017, and your confidence overall in getting a book-to-bill around 1?

Well, in mining, or mining and oil and gas?

Yes, mining and oil and gas. Yes, please.

Yes, I think what you see is the quarter-by-quarter backlog numbers can be good or actually can be slightly misleading, depending on the contracts and the durations, and the likes. The reason we are confident about oil and gas is because CAD3.6 billion at this stage of the year is a really good place to be when we don't have a large amount of Gorgon work left in the backlog.

Because that was a major piece of work over the last couple of years; has been a big part of the backlog. So the reason we're confident is because as that's tailed off quickly through this year, and will continue to go down to December as we complete, we have replaced the vast majority of that through other contracts in other areas.

So that's the reason we are confident there. And in terms of mining, we've got, we're in the process of bidding things.

We're confident that we are going to win projects. And so we just wanted to give a sense that we really do see mining starting the year probably at a higher backlog than the beginning of this year.

Albeit the mining is a pretty small part of the overall business picture for us; but really important in terms of key customers and high scales of our employees that we want to maintain.

Is booking in mining and infrastructure the key drivers that could force you to take further actions, down the road? Is it the two industries that you are monitoring in terms of booking activity that could influence your further actions?

No, I don't think so. I think the -- in terms of infrastructure, at CAD5.6 billion, we expect through the heavy bidding period in 2017 that effectively that will -- if we've got reasonable success in multiple bids in 2017, then we actually see infrastructure as part of the growth engine, going forward.

Mining, I think it's -- we were trying to indicate that we see an uptick in some of the mining projects, albeit it's pretty minor in the grand scheme of things. So I think the more that we book and execute within mining, after we've taken the cost reduction actions to realign the business, provides an opportunity for us to grow that within mining.

And just in terms of infrastructure, a front of very healthy margins in the quarter. So, just wondering for next year, given all the bidding activities you foresee, could you achieve an EBIT margin or sustain at 5%, 6% range next year?

Or even maybe some upside from current levels?

This is pretty much in line with what we've said previously, which is good performance is in the 4s; really good performance in the 6s. And what we need to balance is the amount of sales that we invest in, versus the G&A, and ultimately -- because I think for the first time in a long time, we are sitting, looking at the infrastructure bidding opportunities just in Canada alone, and thinking that we are probably going to have to be a bit more selective in terms of which ones we bid, rather than where everybody has been previously about bidding everything.

When you discuss some of the momentum you are enjoying in the renewable sectors in terms of the pipeline of -- that you are hoping to add to the backlog, are you specifically referring to hydro?

No. We started a strategic initiative around growing the renewables sector, specifically within the Canada and the United States around solar and wind turbines, wind power.

So, we've had a group that have been working on that in terms of strategies, sales, customer relationship management, and then ultimately bidding on some of these projects. So, we see these as a growth area, but again, specifically in wind and solar.

Got it. And can we get an idea of how big that team pursuing that type of work is, and how long you've been -- how long has it been a focus of yours?

It's been a focus certainly for the majority of this year. But it takes time to put a team together, to put the bid list together, to put the references together, to put the differentiators; and then, ultimately, to start to engage with some of the customers.

But I think one of the -- there are multiple projects across North America within this area. And I think one of the real differentiators that we have is also our capital book, in terms of being able to talk to some of the developers a lot earlier than the traditional competition.

So we are looking to see whether that can help us win projects earlier than the traditional market.

Okay, great. Thanks for that.

And then you touched on Champlain Bridge briefly, but I was wondering if you could provide an update on how the project is going.

The project is going pretty well. It's slightly ahead of schedule.

I know the infrastructure team are certainly looking out the window, hoping that the current temperature in Montreal stays like that for another four weeks, and that will be a good position. And the -- we had a review of the project just the other day, and the project is in really good health.

So we're pleased about where it is at the moment.

Okay. And lastly for me, when you set out your 7% EBITDA margin target for next year, were you envisioning SNC generating the type of revenue that you are right now on a run rate?

Sometimes companies need to trim some businesses, trim some fat, do improve margins first; and then they can get enough comfort to start bidding on new work. Just wondering -- it's probably -- definitely a big picture here, but effectively are you comfortable that you could achieve that 7% margin with the current revenue run rate?

Well, I think we've mentioned that we intend to sell the French business, and we told you today, and in the presentation, the backlog associated with that, and also the facilities management piece. We really don't envisage any other major bits of the business that we would look to divest, at this point in time.

And as I said earlier, we're not looking to shrink the business in order to improve the EBIT. We're looking to make sure that we, the business that we've got is all core; adds more than just the individual part of the business; it somehow contributes to another part of the business; and that we drive the efficiency and profitability associated with that.

So that's our objective.

I was wondering if you could provide a little bit more detail around the circumstances that triggered the SG&A expense benefit of CAD32.5 million. I was trying to understand if this was in some way connected to a change in your view around discount rates as it relates to future obligations.

Or if this is adjustment related to past expenses that you feel you [technical difficulty] not totally clear on what drove that.

Yes, I'll take that. It wasn't discount rate-related.

It was actually more, twofold, really. This is a legacy matter.

And there's been some progress as it relates to the site itself in terms of solutions that we could identify. So we had our technical, we have a team working on this matter.

So they work through different technical solutions over time. And basically we felt confident, at this stage, that we had solutions that were better suited for this site than previously.

And that's basically resulted in the change of estimate.

And this is not something where we should expect any further revisions as you get further along in this process. This is a one-time situation.

Yes, it is. Hopefully quickly, as quickly as possible, it will get fully resolved and concluded.

And there might be some adjustments around there. But at this stage, we think the provisions we have on this properly reflects where we think we'll be.

Okay. That's great, thank you.

And then just switching over to oil and gas, just two clarifications really related to that. First of all, as I understand it, there was both a revenue and a cost re-forecast impact related to the two Middle East projects that affected the quarter.

Can you quantify the revenue impact?

It was really both in the same, because the way we did the re-forecast was essentially through our work in progress. So, unbilled amounts that basically had to, we had to adjust the revenue, and that just flowed through.

Okay. The reason I'm wondering is just in terms of, if one wanted to go back and look at that segment on an adjusted basis for the re-forecast in terms of calculating a margin, are we -- is it fine to use the revenue number you have disclosed for that segment?

Or do we need to be grossing that up by something?

No. Yes, it would be fine to use the revenue number, the CAD117 million.

Okay, perfect. And then just the second part of this question on oil and gas.

The disclosed amount is strictly related to those two projects in terms of the unfavorable amount, but there were some favorable offsets. That CAD116.7 million is not a net number, that is just for the two Middle East projects?

Yes, that's correct.

And can you tell us if the favorable portion there, is that material?

It's actually a number of projects, so it's not just a single one. So overall there's nothing material in each of them.

But they tend to offset each other for the most part, with some positive at the end. And then really more -- there's a number of projects that performed better, as well, so I'm not sure I'd call those necessarily re-forecasts in the sense of the word.

Neil, part of your plan, with respect to margin improvement, was capturing some of the contingency that is embedded in the contracts. But I'm just wondering, with the advancements you've made in G&A, is that more or less of a factor for your EBITDA margin target that you have for 2017?

In other words, is the risk of getting there today -- or not getting there today, lower than it has been in the past, given what you've done on the cost front relative to having to lean a little bit heavier on the contingency side of things?

Well, I think the cost position, which is a target of CAD100 million, and we're at CAD95 million now, so we expect to exceed that. And through next year, we would also expect to continue to look at our cost base.

We would not just be satisfied to say, well, that's that; that's done; that's the end of it. So we will have a continuous focus on that as we go forward.

But in order to get to the target, we still need to be able to access some of the contingency that we talked about before. So, our projects in general are performing far better today than they were a year ago.

And, in fact, I think that is also -- that's also part of the picture here, which is we've got some bad news in terms of two contracts. But actually we've got a number of other projects that are performing ahead of plan, which has cushioned the blow a little bit.

Even so, the blow itself is unacceptable to us in the management team, and we're working hard to reverse some of that. So, in terms of getting to that, which is a stretch target -- but we do need to continue to do all the things that we previously talked about in terms of driving costs down, being able to consistently deliver, and access some of the contingency that we've got built into our projects that we've won.

And the two oil and gas projects, did that -- was that a catalyst for further internal process or policy changes? Or generally how that came about would be how -- because these things are episodic; they happen.

They happen, right? Did how this happened cause you to have to rethink some of your internal processes and systems?

Yes, there's always -- like all these things, there's always opportunity -- well, I think it'd be silly if we didn't go back and look to see lessons learned and how can we improve. Like I said, I was -- the team was particularly disappointed with this because -- just because it's not what we're trying to instill and deliver.

And there are a number of lessons learned out of this that we will implement, specifically in terms of how we reconcile earned value calculations versus costs on these types of contracts, or maybe wider in terms of all contracts. So there's really good lessons learned here.

But at the moment, the team's priority is on hopefully resolving some of the commercial issues in order to be able to reverse some of the charges that we've taken. But we will also implement lessons learned.

Okay. Then last question, Neil, just on the infrastructure.

I know your comments around timing and whatnot for bigger projects seems to be later in 2017; bookings this quarter in the $150 million range. Is there anything in those size ranges to think about coming between now and then, like a $200 million, $300 million?

Or is this the rate until we get into some of the bigger projects in the second half of next year, just in terms of bookings?

I would say generally the bulk of it is in that range. But there are a couple of things that we're pursuing that are bigger than that, that are less headline-type contracts which I really can't say anything about at the moment.

So we are pretty focused on that. But excluding them, it's more in that range.

Just thinking about the power business a little bit and your move into alternative energy. There's been a lot of discussion amongst a number of governments -- Alberta certainly comes to mind -- talking about phase-out of thermal power.

So is really the strategy around moving to alternative trying to offset perhaps some thermal declines in the future? Or is it really about being able to build a different set of capabilities on top of what you might do in either gas or other thermal type power?

I actually think it's a bit of both. We are seeing -- after the sale of AltaLink, you've seen a decline in -- a rapid decline in T&D.

And also your point there about thermal I think is probably correct. So there's a bit of an offset.

But actually we also believe that when we combine our geographic presence, particularly in Canada -- so, we've got people in lots of areas in lots of places -- together with the skill set we have, together with the ability to have the conversations earlier with capital -- we think we've got a differentiator in a market that continues to grow, albeit it's not highly technical in terms of wind power and solar. But it's a very, very attractive, continue-to-grow market, and that's why we want to play in it.

Okay, fair enough. And then this question -- probably better for Sylvain.

But just looking at the tax in the quarter, one of the things you alluded to in terms of the tax rate was some previously untaken loss carry-forwards. Just a quick question: where there any other potential loss carry-forwards that you may have, or was this a one-and-done type thing in the quarter where you tidied up what was available to you?

Well, I think the tax rate in the quarter is a bit tricky, because on the E&C side, because of the performance, you have very strange dynamics. But I think what we see continuing through the year is really more about geographic mix that we still see as favorable.

So I think what we've been saying since the beginning of the year was a 20% to 25-ish, the low 20s, I guess, tax rate for the year. And we're still on track for that at this stage.

Okay. What I'm more thinking about as we move into 2017, are there other loss carry forwards that you think you may be able to utilize as we continue to see some earnings growth?

Well, we continue, as Neil said earlier in the operational excellence, we have projects all over the business. And one of them is looking at our tax structures and how we fund our affiliates, and things like that.

So, there are, we see some opportunities there. There are regions of the world where we're not [tax] affecting losses.

So to the extent that we can improve the situation there, that could help, as well the tax rate. So, we still see next year, we still have to work through the budget, but we still see next year as being favorable versus the stat rate, at this point.

Just very quick question for me, if you don't mind. Just looking at what's happening in the Middle East, I was trying to get an update in terms of the competitive environment.

It seems to me that we do see a bit of a return of the South Korean companies. I'm just wondering if you are seeing the same on your front, in terms of the projects that you are bidding on right now.

Any commentary would be much appreciated.

We see one or two areas, but nothing that significant at the moment; doesn't mean to say they won't. But generally where we're operating, and certainly in terms of Saudi Arabia, for instance, it's pretty difficult to quickly establish a major presence there from a workforce localization, visas, facilities, and the likes.

And we think we've got a very, very good position in that. In other countries we are maybe a bit smaller, then I think the ease of the South Koreans coming in would be a bit easier for them, so that's a bit more of a threat.

Okay, that's helpful. And then maybe, Neil, do you mind expanding please on the strategy at some point to be able to leverage legacy Kentz capability in other markets than oil and gas in the Middle East?

If there's any progress on that, please.

Yes, we're, again, under operational excellence, we are really pushing the, not just the cross-selling, but the cross execution capabilities. And when we look at some of the opportunities for us in some other sectors, then it's clear that in certain geographies the legacy Kentz business can bring construction management, commissioning, support, operations and maintenance, across into some power projects, certainly in mining.

So that's a big focus for us, and hopefully we'll start to reap some of the rewards of that in 2017.

And actually as you mentioned mining, is there a push for clients to do more EPC-type work and move away from an EPCM? Just trying to assess a bit of the risk profile of the incoming contracts [Multiple Speakers]

Yes, I think that's right. I think there's a few more that are looking at what the ability might be certainty of delivery if they switch to that model.

But the other piece that we are seeing a big pickup in is the whole sustaining capital piece, or operations and maintenance, or whatever you want to call that piece; but more in the OpEx rather than the CapEx. And we're doing more and more in that sustaining capital piece, as mining companies begin to [technical difficulty]

And there is a focus on right now for mining. Is it mostly precious metals, or do you see other opportunities as well?

We see opportunities in some, but also in -- I guess some opportunities in copper, potash, fertilizer, sulfuric acid type opportunities.

Thank you all for having joining us today. If you have any further questions, please do not hesitate to contact me.

Have a great day, everyone. Thank you.