Thank you. Good afternoon, everyone, and welcome to SNC-Lavalin’s 2016 fourth-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 and could cause actual results to differ materially from what may be implied as forward-looking statements. Such 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. You will find more information about the risks and uncertainties associated with our business in our financial documents filed with the Canadian Securities Commission, which can also be found on our website.

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 2016 achievements and results and discuss our segment’s performance. Then I will ask Sylvain to discuss the Q4 results in a little bit more detail.

As we can see on Slide 4, we currently delivered in 2016 on five of our six key objectives, delivering our E&C adjusted EPS in line with our guidance at CAD1.51, reducing our SG&A cost by CAD132 million ahead of our CAD100 million target, delivering better than planned operating cash including the disposal of our non-core businesses and growing our mining and metallurgy. The creation of the mature asset fund is still being worked on and we hope to complete its setup soon.

Turning to Slide 5, four strategic priorities will guide our efforts throughout 2017. We will continue our progress in operational excellence, driving improvements in every area.

Several new initiatives will help us enhance our efficiency, delivery, competitiveness and ultimately shareholder returns. The Q4 drive to further reduce our cost base together with a business disposals we announced, we’ll remove from CAD100 million from our cost base in 2017.

These actions are to a very large extent already complete. Our growth in difficult markets depends on strengthening further our client relationships and the delivery of consistent excellent service.

Thus far we are determined to become even more client-centric organization which is our second priority in 2017, by consistently delivering innovative technology related solutions, we aim to greatly increase repeat business with our blue-chip client base. Thirdly, we will continue building our performance driven culture that inspires our employees to go beyond contracted expectations to improve on everything we do every day.

We aim to develop a culture that even in better fosters innovation creativity and teamwork. Finally, we will remain focused on growing our business.

2017 organic growth will be largely driven by our infrastructure sector in Canada along with our nuclear renewables and our sustaining capital offerings across all four sectors. Making good on these strategic priorities is essential to our success.

We intend to generate consistent strong financial performance through world-class execution delivered our top-tier margins. Turning to Slide 6, I’m pleased to report that for the second year in a row we produced strong financial results in line with our 2016 guidance.

In fact, we have continuously improved our adjusted diluted E&C earnings per share since 2013. In 2016, our net income attributable to shareholders reached CAD256 million.

Our adjusted net income from E&C grew by 12% to CAD226 million or CAD1.51 per diluted share compared to 2015. We maintained a stable diversified revenue backlog of CAD10.7 billion, on a solid balance sheet with cash and cash equivalents of CAD1.1 billion.

Due to our confidence in our long-term outlook, cash position and diversified revenue backlog, we’re raising our quarterly dividend today by 5%, sustaining a 16-year trend of increases. Let’s now look at each of our segment starting at Slide 7.

Our oil and gas sector had strong revenues of CAD1 billion, its highest quarter of 2016. And the backlog remains strong at CAD3.9 billion.

If we exclude the net favorable impact of CAD28 million regarding the two projects in the Middle East highlighted in Q3, the Q4 EBIT percentage returned to a more normal 7.1% to run rate than Q3. We continue to see many of large EPC and sustaining capital prospects and opportunities ahead particularly in the Middle East and the United States.

Turning to Slide 8. We are seeing positive signs with our mining and metallurgy sector which had strong winds during the fourth quarter increasing the backlog to levels only seen at the beginning of 2016.

We’re also pleased with our sustained EBIT percentage performance. We see many prospects and opportunities ahead of us particularly outside of Canada.

I’m confident that we will see a sizeable growth in backlog in this sector through the first quarter of 2017, but we are well positioned to capitalize on our technical expertise and superior client relationships. Moving to Slide 9, the power sector continues to be well including its EBIT margins.

We’ve recently been awarded a further Candu project in Argentina in the highly attractive nuclear sector. This six-month three-project contract will allow us to engage with suppliers for long lead equipment, conduct preliminary design work, deliver safety analysis, offer licensing support and provide technical assistance from Canada.

And turning to infrastructure segment on Slide 10, we’re very pleased with the 2016 EBIT margin improvement and execution performance in this sector. Our major projects continue to progress well.

Bidding activities continue to be strong and we continue to see many opportunities here in Quebec, Ontario and throughout Canada. It is important to note that the following, the completion of the seal of our non-core real-estate facilities management businesses in Canada and our local French operations in December 2016, the company has removed CAD903 million from the December 31, 2016 infrastructure backlog, including CAD771 million from operations and maintenance and CAD132 million from infrastructure and construction.

And lastly, turning to Slide 11, our capital team continues to work closely with all four sectors to develop opportunities. We saw good examples of this in Q4 with the award of an approximately US$100 million 10-year build and operate oil and gas services contract in the Permian Basin of the United States.

As for Highway 47, we’re very pleased again with the quarterly results. Revenues increased by 17% in Q4 2016 compared to Q4 2015, and the corresponding EBITDA increased by 25% for the same period.

In summary, we’re very pleased with our 2016 performance. We delivered on our commitment, met our 2016 guidance and are well positioned within our industry to capitalize on organic and inorganic growth.

Our diversified business model, solid balance sheet and strong diversified revenue backlog give us confidence that we can meet our growth ambitions. We expect 2017 to be another good year for SNC-Lavalin as we continue to progress in our operational excellence efficiency program, drive our cost base down and continue building our performance driven culture to deliver for our clients.

And therefore we expect our adjusted diluted EPS from E&C for 2017 to be in the range of CAD1.70 to CAD2 compared to the CAD1.51 delivered in 2016. 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.

Turning to Slide 12, E&C revenues for Q4 2016 totaled CAD2.1 billion, lower than Q4 2015. The variation was mainly due to a decrease in oil and gas which despite having delivered its strongest revenue of 2016 had revenues lower than Q4 2015 mainly due to completion of certain major projects.

The mining and metallurgy segment continued to be affected by the persistent software commodity prices. The infrastructure and power segments also had lower revenues in Q4 2016 versus Q4 2015 mainly due to near completion or completion of certain major projects such as the Highway 47 expansion, Sainte-Justine Hospital and transmission and distribution line project.

E&C SG&A expenses in Q4 2016 amounted to CAD201 million; slightly lower than Q4 2015. This was mainly due to the successful implementation of the STEP Change program and the ongoing operational excellence program.

Note that as the STEP Change program was launched in Q3 2015 and completed in December of that year, Q4 2015 already saw important savings from this program. It is also important to note that we have spent more in Q4 2016 in business development activities than in Q4 2015.

But this was more than offset by a decrease in G&A. The adjusted EBITDA margin and amount from E&C was lower compared to Q4 2015, reflecting the lower segment EBIT mainly from oil and gas and mining and metallurgy.

Net loss from E&C was CAD38 million or CAD0.26 per diluted share in Q4 2016. The loss was mainly due to a loss of CAD87 million under disposal of our local French operations, partially offset by a gain of CAD43 million under disposal of our real-estate facilities management business in December.

Concerning the loss on the sale of our local French operations in Q4, we believe this was the best economic option for all stakeholders. Despite restructuring and improvement efforts over the past few years, our overall business in France has not been capable of generating the required profitability.

Also in Q4 2016, we have progressed with our long-term operational excellence program. And as a result of this program, incurred CAD88 million of restructuring cost in Q4 2016.

We believe that these restructuring costs which were mainly for severances should remove as Neil said a further CAD100 million from our cost base in 2017 compared to 2016. On a segmented basis, there were lower contribution from oil and gas and mining and metallurgy in Q4 2016 while the contributions from power and infrastructure were in line with Q4 2015.

Adjusted net income from E&C in Q4 2016 was CAD73 million or CAD0.49 per diluted share compared to CAD66 million in Q4 2015 or CAD0.44 per diluted share. The increase was mainly due to lower SG&A, lower non-controlling interest and lower effective tax rate partially offset by lower gross margin.

Adjusted net income from capital was CAD43 million in Q4 2016 compared to CAD35 million for the corresponding quarter in 2015, mainly due to high level of activity of capital investments and an increase in dividends from Highway 47 ETR. Our balance sheet remains strong at the end of December 2016 with a cash balance of CAD1.06 billion compared to CAD896 million at the end of September and CAD1.6 billion at the end of 2015.

Our revenue backlog remains strong at CAD10.7 billion, more details coming up on that. Now turning on to Slide 13.

We see that power infrastructure and construction and OEM segments, EBITDA amounts are in line with Q4 2015. While the mining and metallurgy and oil and gas segments were lower.

The decrease in mining and metallurgy was mainly due to lower level of activity, due to persisting difficult market conditions in this sector and to the completion or near completion of certain major projects. But this was partly offset by lower SG&A.

Note that this sector has recently been awarded some projects such as service contracts in Turkey and Russia and EPC contracts in Chile. The backlog has returned to a higher level and we expect a continued increased backlog for 2017.

The decrease in oil and gas was mainly due to a low level of activity on certain major projects that are reaching or have reached the potential completion. This decrease was partially offset by a net favorable impact on gross margins of CAD28 million, regarding the two projects in the Middle East highlighted in Q3.

Note that the Q4 2016 EBIT margins for infrastructure and construction was 1.9%, lower than our targeted margin of 4% to 6% for the segment closed 2016 with an EBIT margin of 4.2% compared to negative 0.1% in 2015. The lower EBIT margin in Q4 2016 is mainly due to higher business development activities than in Q4 2015.

Now moving on to Slide 14. Our revenue backlog at quarter end remains solid at CAD10.7 billion.

Our backlog was composed of 45% in reimbursable contracts and 55% in fixed price contracts in line with the other quarters of 2016. Bookings for the fourth quarter were CAD1.9 billion totaling CAD7.8 billion for 2016.

As expected and mentioned at our last earnings call, our backlog decreased by approximately CAD900 million in Q4 due to the sale of our real-estate facilities management division and French operations. If we remove these businesses from the December 2015 balance, total backlog would have been CAD10.9 billion in line with this year’s closing balance.

Overall, we have maintained a high quality and diversified backlog. Turning to Slide 15.

Compared to 2015 we have been able to significantly reduce our operating cash flow usage. Our operations essentially generated CAD106 million in cash compared to usage of CAD515 million in 2015.

The 2016 improvement was primarily driven by a reduced working capital requirement of approximately CAD75 million on certain major projects compared to CAD644 million in 2015. We also paid less tax in 2016 compared to 2015 as in 2015 we had to pay taxes on the gain we made on the disposal of our AltaLink investment in 2014.

We continue to deploy efforts, improve our cash generation and to structure our projects to optimize our cash flows. We see on the right-hand side of the page that the cash generated by the disposal of capital investments mainly Malta, was more than offset by various outflows: particularly CAD151 million of project-related capital expenditures, CAD76 million of net increase in receivables from long-term concession arrangements, CAD396 million of repayments for project financing loans, and CAD156 million of dividends to shareholders.

And moving on to the last slide, Slide 16. As Neil said, we’re targeting an adjusted diluted EPS from E&C for 2017 in the range of CAD1.70 to CAD2 per share.

While we anticipate continuing market challenges in 2017 in certain of our sectors, we expect to benefit from our recent restructuring savings and operational excellence program. Except for mining and metallurgy, we expect increased segment EBIT margins for all segments in 2017 compared to 2016.

We anticipate increased segment EBIT from the infrastructure and power segment, mainly driven by North American capital spending growth and global nuclear opportunities. For oil and gas, we expect the increased segment EBIT to come from increasing activities in the Middle East and United States.

We expect mining and metallurgy segment EBIT to remain in line with 2016 due to persistent software commodity prices. However, as said earlier, we do expect an increase in mining and metallurgy revenue backlog.

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

Thank you.

Hi, good afternoon. Just on the outlook for 2017, it looks like you’re still targeting 7% EBITDA margin, so I’m assuming the sales have to come down just to meet your guidance range.

I’m just wondering, Neil, if you can comment on any changes in outlook in the past months in revenue or backlog opportunity by segment?

Yes, good afternoon. I think if you look at the revenue piece, we probably have seen a softening in power specifically around transmission distribution and in thermal power.

So from that perspective we see that coming down a bit. That’s the mean bit, probably the only thing.

So, maybe revenues coming down a little bit there is probably what we see.

Okay. And maybe, there was a difference in legal language in the notes of the financial statements about potential pull-forward of preliminary trial into 2017 from 2018, just wondered if you can comment on how that may impact SNC’s bidding or awards in 2017?

And would there be any impact on the M&A timeline from Managements perspective?

No, there wouldn’t be any impact either in our bidding capabilities because until the whole process is complete, and until we get to a place where we are found guilty of anything and clearly, everybody knows that we are robustly defending our position. Then we are good to go on bidding through the integrity framework arrangements that we signed over a year ago.

And on M&A as well, I mean that would not be again that would not be affected. We are going to continue to build the business as we see fit and generate the business for shareholders and deal with the legal issues as a separate subject.

Okay, and maybe just finally on the M&A just following up on that. In terms of the opportunities that you’re seeing now and readiness of the Company to acquire and integrate something if you can make some comments on where you are now relative to maybe a couple quarters ago?

Yes. So, I think in terms of readiness I think we are in position where if the right thing came along, we’d be ready to go both in terms of confidence from our shareholders, confidence from the organization, our ability to do that.

In terms of the practical thing, I mean we’re still looking at the theoretical universe of what would the ideal thing be or multiple things be. So, more infrastructure power than resources I would like something that helped us become more sustainable in the regions that we’re smoldering.

So ultimately being more global and would certainly like it to at least remain our help with the balance in the business model between simplistically reimbursable and lump-sum. So, we’re still not theoretical look but we are ready, yes, I mean, if the right thing came along that was a good fit with most of the criteria then we’d be ready to go.

Okay, that’s great. Thank you.

Thank you.

Thanks, good afternoon. Just a question on the guidance for either Neil or Sylvain.

When we look at the 2017 E&C EPS guidance, does that assume any further reversal of the provisions taken in 2016 oil and gas or any other reversals we’re just taking provisions for that matter?

Well, we don’t go in that detail I guess on, in terms of what we disclose. But I guess the nature of our business is such that you’ll have ups and downs across major projects, linked to contingences and so forth.

So, I think what we try to do with our guidance and our budget is essentially to have a balanced picture of the various I guess risk and opportunity that we see as we execute our projects. So that’s probably the best what I can answer your question.

And maybe I could just clarify one point just for the avoidance of doubt. So in terms of our Q3 oil and gas projects in the Middle East, you will have seen that in Q4 we recovered CAD28 million also the amount that we disclosed in Q3.

And we’re still very hopeful and confident that we’re going to deliver more on that. So, it’s not about the, I just want to make sure that you don’t think that somehow it’s the worst thing of not positioned because it certainly is not.

Right, no, that’s helpful. Thank you.

I guess, just secondly, I mean, maybe picking up on something Sara mentioned. The 7% EBITDA margin target the E&C business unless I missed I didn’t actually see that referenced anywhere.

So I just want to confirm that that is still in fact the target?

Well, we’re in a place where we’re giving guidance in terms of EPS guidance. So, we don’t particularly want be giving revenues on margin guidance as well otherwise it’s the complete picture.

But, we’ve got, we’re not shying away from the targets that we’ve set inside the business.

Okay. And then, just lastly from me, the CAD100 million of additional cost savings that you announced today.

Will all of that be realized in 2017 or is that an annual run rate which may not be fully realized until you get to some point in 2018?

No, the intent is, it will all be in ‘17.

Okay. All right, that’s all from me.

Thank you.

Thank you.

Hi, good afternoon. Neil, how should we look at the proportional breakdown between your revenue mix and reimbursable versus fixed price percentage like, is it reasonable to still maintain a 60-40 outlook and could it go up to 70-30?

And if that would be the case, then what kind of impact could it have on EBITDA margins?

I think we’ve talked a number of times about having enough balance between the two. And I think the reason that we talk about 60-40, 40-60 is because it’s not, we’re not in complete control of that.

So we can’t define precisely. But we do want that balance.

And I think the other thing that tends to move us from a slightly more lump-sum in the backlog to the more reimbursable in the revenues is the amount of call-off contracts that we do which principally are all reimbursable. So the things that we do in terms of more, either in the seller-doer model or in the MSCs, the call-off contracts where we do a lot of work for clients and their reimbursable basis, never really getting to the backlog per say.

So, we’re very, very focused on making sure that we stick at least in 60-40 split. And the more reimbursable work we do in very general terms depending on the sector then the more secure we believe the increase in EBIT is.

Okay. And my last question, on oil and gas front, in terms of EBIT, could you reach the same levels as you did in 2015 going back?

I think when we’ve talked about the margins in oil and gas, again, in very general terms, when we made the acquisition in 2014 we were talking about 7.5% EBIT margin. And of course then the oil price came down.

And we took a number of actions in terms of making sure that we reduced our G&A, not just in the company but in the oil and gas sector because we wanted to offset the pressure that we knew the customers were going to put on us in terms of gross margin. So, in general terms, we saw, we saw a 1% net decrease generally in the EBIT number.

And so, therefore our return to 7.1% here is really pleasing because that back and in fact slightly ahead of generally where we would expect the EBIT number to be post the pressure on the gross margin number.

Okay. Thank you very much.

Thank you.

Good afternoon gentlemen. Just to come back on a previous question.

With respect to the CAD100 million, cost saving that should be achieved this year. Is there any cost or restructuring costs associated with those savings?

I think most of that was all incurred in Q4 2016. So we expect a minimal amount in ‘17 linked to that.

Okay, perfect. And just in terms of bidding opportunities, obviously it’s quite active right here.

I’m just wondering if there is any big impact on the income statement when it comes in terms of bidding cost. And also from a working capital standpoint, assuming you’re successful in 2017 in increasing your backlog, any big implication from a working capital standpoint?

Well, just on the first part of your question regarding I guess the cost of bidding, right?

Yes.

All that is embedded in that saving of CAD100 million, right. So yes, there will be increased cost in doing some bids.

But at the same time we’re offsetting that with other savings in other parts or in G&A. As far as working capital, I guess it all depends on what we win in the deal structure of those.

Now some of those large deals we would hope carry with them a cash flow positive profile. Now, these awards are going to be late in the year so it’s hard to say or later in the year, so it’s hard to say if they’ll be in time to generate some of that.

But our aim is clearly to have cash flow positive profiles on those contracts as they get awarded.

Okay. Thank you very much for the time.

Good afternoon. I wanted to go back to acquisitions.

I think in the past you talked about large transformation [indiscernible]. Is that still how we should be thinking about that?

Like I said earlier, we run a theoretical model in terms of ideal size. Would we rather do one than three, yes, it’s easier to integrate.

It’s less pressure on the organization. So it’s a theoretical exercise.

We’d rather do one than three. We like it to be across our three of our sectors, two or three of our sectors.

We’d like it to be geographically enhancing and we’d like the business model to be probably a bit more reimbursable than model some. So that’s a theoretical model.

And we just need to keep looking at the opportunities that are and see who best fits that, whether it’s one, two or three companies. So it’s a preference.

But it’s a theoretical model at the moment.

Then as we think about organic growth going forward, is there any reason why it would be different, or would not mimic what we’re seeing as far as backlog growth? Is there any notable contract wins that are not reflected?

I think there is a piece of what I was talking about earlier in terms of MSC type call-off work, seller-doer model type work that’s not in there. So that will roll through as we execute the work through ‘17.

But then of course the big piece in terms of our guidance, our guided growth is the biggest piece is the infrastructure Canada in terms of we’re putting a shortlist on Goldie, George Massy, Finchwell West LRT, the Montreal LRT, there is an XPs, so on Ottawa just to name a few. So, we see potential large organic growth and there we still see some great organic growth in nuclear in renewable.

And then the call-off type work that we tend to do tends to be in the sustaining capital arena. And we see good opportunities across all four sectors and with sustaining capital.

So we should be thinking about low single-digits?

For ‘18?

For organic growth.

For ‘18. So I think ‘17 is going to be a big-big year.

Over the initial ones I talked about, I expect that we’re going to be successful on a few of these. So they will go into the backlog.

But in terms of taking into execution that’s really the majority and that’s going to be in ‘18.

Last question. You gave yourself an X here on the setting up for the new structure of the North American concession you were talking about.

When do you expect to accomplish this and what does that look like?

Yes, so, as you probably remember we were hoping to get that done in ‘16 and even in the first half of ‘16 when we started the year. So, at this stage we see this as a ‘17 event.

I think it’s progressing nicely at this stage. I mean, as I said earlier, I think on prior calls, it took us longer than anticipated in getting the setup done because these assets have not been setup or I guess built in order to be placed into a fund down the line.

So, it took us a little while to arrange for that so that it - we don’t lose value in the process potentially. So, I think progress is being made.

And when we see that is a ‘17 event.

Okay thanks, very helpful.

Hi, good afternoon guys. Sylvain maybe for you, are you able to quantify the amount of revenue that was generated in ‘16 by the two businesses that were sold in December?

I think it’s about CAD400 million but let us dig through that quickly and we’ll come back with that.

Sounds good. And the CAD100 million in additional cost savings for ‘17, is that going to be all-in on the SG&A line for the E&C business, or is some of that up in gross margin?

SG&A in total for the company, most of it E&C but, it’s SG&A.

Okay, helpful. I thought the oil and gas bookings were surprisingly strong.

Can you give any color to what went on there and maybe anything get pulled forward into the quarter? And I guess more importantly has the duration of that backlog changed much over the last year, I guess, just trying to figure out.

No, nothing specific I would say in terms of change of duration, in terms of the bookings of Q4 versus what we’ve seen in prior quarters.

I mean, the one thing that we’re particularly pleased with of course is that we got really strong quarter at the same time as we completed - essentially completed the demobilization of the Gorgon project. So, the demobilization of the Gorgon project and that large project coming out of both backlog and revenues was always a challenge in the back end of 2014.

And effectively we’ve been able to replace that and increase it slightly, so, but nothing unusual there, just good performance by the team.

Okay.

Just to get back to your question earlier. So, it’s about CAD450, so 250 for the O&M bit and 200 for France.

Okay. Last one, can you just give a little flavor as to the bookings you expect in the mining group either by commodity or region?

I think that you said Q1 this quarter that we’re in now, you’d expect some significant bookings.

Yes, we do. We are well positioned on a number of bids.

We’re getting good indications. And we see, I mean, I know the mining group is still by far the smallest sector.

But we do see significant growth in terms of the backlog in the first quarter. I’d expect to see us at least doubling the backlog by the end of Q1.

Okay, thanks guys.

Hi, good afternoon gentlemen. Just a quick follow-up question in relation to Australia, actually when I look at the backlog there, it’s up year-on-year.

And Neil, as you mentioned, because you’re coming off Gorgon, so what’s driving that backlog increase? If you don’t mind, please comment.

It’s a variety of, I mean, it’s a variety of contracts across the Middle East really. I mean, and good performance in North America, specifically the U.S.

But the main driver is the work that we’re doing across the Middle East, predominantly Saudi Arabia. But Abu Dhabi, Dubai for some other countries work that we’re doing in Qatar.

So it’s a pretty powerful region for us at the moment.

But that’s in relation to the totality of oil and gas and I wanted to ask specifically on Australia, why the backlog is up there year-on-year?

I think we’re not sure what - specifically the Australia backlog?

Yes, because I think in your disclosure, the percentage coming from Australia has increased or is that just the percentage, not the absolute numbers?

Not the numbers.

Yes, okay, not the backlog. So the actual, that’s really just a big surge in the completion of Gorgon for one but the ramp up on the excess projects.

Okay, that’s helpful. And then, maybe going back to the working capital dynamic, the thing that I’m trying to understand is that I mean, the revenue trajectory has flattened a little bit right now and the working capital commitments are less.

But have you done anything structurally different that will enable you to preserve the free cash flow generation even in the ramping revenue environment, just trying to get a better understanding of those puts and takes?

Well, I think there is, there is actually not just one dynamic that happens with our backlog or our business as it relates to cash or working capital. What happens is on the large lump-sum projects as I said earlier we try to get cash flow positive on those projects as they get awarded.

And what you will sometimes see and we saw that over the past couple of years is that you - if you replenish the number of those lump-sum projects you can manage to maintain your, the project is underway and as they complete they will use cash at some point in time. So they get cash flow positive from the start.

And then they use cash at some point as they reach completion. So, you have to replace that usage with new awards that are also cash flow positive.

So you have that dynamic that happens. The other dynamic is on the engineering services or reimbursable you’ll tend to have sometimes more of a normal payable or accounts receivable cycle which means that you will lag the work.

So you’ll do the work, you’ll build the work and then get paid for the work. So, that requires some investment in working capital if you grow that part of the business.

I don’t know if that answers your question. But you have really two dynamic there going on.

And we’re trying to manage both. And all I’d say structurally I think what we’re really paying a lot of attention to is the cash flow profiles of the larger projects to make sure that we are above the line so to speak.

And then on the ones that we’ll follow are more traditional accounts receivable cycle is obviously managing DSOs in terms of collections.

Okay, that is helpful. And maybe last question, in terms of capital allocation.

Obviously M&A is part of the toolkit. Any thought process in terms of share buybacks, especially at this level and this implied valuation?

Thanks.

Yes, I mean, not at the moment. But we always, we talk about that at every board meeting just to check and make sure whether we ought to do that as one of the tools in terms of a more comfortable allocation but no plans at the moment.

Okay. Is there something structurally that precludes you from doing that?

Or you feel that you would get better return on invested capital elsewhere?

Yes, we believe the invested capital elsewhere will give us a better return. If we can’t come up with good ideas in that space over a period of time then we’ll need to consider it.

Okay. That’s helpful, thank you very much.

Thank you.

Good afternoon. I just have one question.

Are you comfortable with the quality, the health and the positioning of your existing businesses across your markets and regions? Put differently, are you pretty much done with selling assets?

Yes we are.

Perfect. That’s all I have, thank you.

Thank you.

Yes, hi. I would like to come back to your most recent cost cutting program that was announced today.

And I guess this is probably a little naive, but this is your third effort at reducing costs mainly in SG&A I think in a relatively compressed time period. So, I was wondering if you might be able to add a little color as to how this latest program might differ and in particular, why this latest effort won’t seriously diminish your service capability or your marketing business development capacity?

Thank you.

Okay, well I’ll be taking the last piece first. I mean, what you’ll see is that the CAD100 million is the net number.

So what you’ll see in terms of seals. So in terms of SG&A our S is actually going up.

But that’s being compensated by the reduction in G&A. And basically I’ll never give any apology for continue to look to reduce G&A.

Because basically it’s a cost that makes us either competitive or not. So we need to be constantly making sure that we have a very competitive G&A in the marketplace right there.

And that in turn allows us with the combination of the increased spend in BD and sales. It actually gives us a better opportunity to win, work and grow.

And that’s really our objective. Our objective is not about cutting G&A, it’s about being as competitive as possible in order to win more work, expand and do more work.

Okay, thank you for that. And then I had maybe a bigger picture question about the opportunities that your Company might see in the United States market.

So in a speech the other day, our President announced or discussed something on the order of a $1 trillion infrastructure program. And I know that it’s extremely early, but in general, I think your company has had a relatively small presence in the United States.

There have been a couple of recent awards that were announced. But I’m just wondering basically with the economy here maybe picking up, with shift in currency relationships and new administration, whether your Company looks at the opportunities here a little bit differently in any significant manner.

Thank you.

Thank you. I’d say good question.

So, I think the first thing is our outlook is based on really in the infrastructure space is our concentration on Canadian projects. So if something interesting in our sweet-spot, so in rail and transit in particular came up that was attractive then of course we would be interested in pursuing that.

But our outlook and the outlook we pushed today is pretty much exclusively on Canadian infrastructure. So anything that we were to pick up in that sweet-spot in the U.S.

would all be upside.

Okay, thank you.

Hi, I just have a follow-up on the oil and segment. There was comments in the MD&A about the old Valerus business seeing negative impact from challenging market conditions.

Just wondered if you can comment, given the U.S. has been quoted as a growth area for next year, how that might impact your margin in 2017?

Well, I think maybe I could start and Neil can add to this. It sure has been difficult through the year especially the first half.

And then we started to see in the Valerus piece of our business some pickups in the U.S. but also how that business can contribute to some projects outside of the U.S.

So, we’re hopeful that ‘17 will definitely be better than 2016 on that front.

Yes. And I think that is, I mean, that’s really what you should take from that which was, it was a pretty tough here for them in ‘16 across the year.

But we do see more prospects. So to build on operate contract that we announced is very much a Valerus, high involvement from Valerus and some number of other prospects here in the U.S.

But we’d just like to be in a position where we secured a few of these before we started to talk our business up again.

Okay. And in terms of the margin that you’re bidding these at, has the margin profile improved at this point, or is it still pretty subject to a significant increase in activity?

Yes, I mean, it’s sort of strange as it may see, it’s never really been about margin it’s about whether these projects actually happen or not. Once the economics work and they happen then we pretty much get our desired traditional margins.

And so we’re not having a bid really, really low in order to win these projects. There is not like massive amount of competition.

So they tend to be are we the ones that can deliver in the shortest possible time in order to get some of the product to market or not. And we would win more on our ability to give an earlier schedule than it would be on the margin.

Okay, thank you.

Thank you.

Thank you very much for joining us today. If you have any further questions please do not hesitate to contact me.

Thank you very much. And have a good afternoon.