Welcome to Stantec Inc.'s Third Quarter 2015 Earnings Results Conference Call. With us today from Stantec management are Bob Gomes, President and Chief Executive Officer; and Dan Lefaivre, Chief Financial Officer. [Operator Instructions] As a reminder, today is November 5, 2015, and this conference call is being recorded as well as broadcast live over the internet. It will be archived for future reference at stantec.com under the Investors section. Therefore, any members of the media who are joining the call today in a listen-only mode and who wish to quote anyone other than Mr. Gomes or Mr. Lefaivre are asked to please request permission to do so from the individual concerned. Stantec management would like to caution you that this call contains non or additional IFRS measures, as well as forward-looking statements and information, which may involve risks and uncertainties. I would now like to introduce your host, Bob Gomes. Please go ahead, sir.

Thank you. Good afternoon, everyone. Thank you for joining our 2015 third quarter results conference call. Today, we are please to report solid results for Stantec's operations in the second quarter of 2015. The strong performance in infrastructure and positive organic revenue growth in buildings partially offset the continued a retraction in our energy and resources business. Building and infrastructure represents approximately 65% of our gross revenue year-to-date. Our ability to achieve positive results overall when one business operating unit experienced retraction demonstrates the strength of a divers business model we have build over the years. We are managing our energy and resources business very well as we and our clients face low commodity prices. I am confident that our company will continue to be successful as we move forward towards the end of the year. Dan will now provide a brief summary of our financial results for the third quarter. I will then speak to some highlights from Q3 and provide an update on our outlook. We will then address individual questions. Dan?

Thank you, Bob. Good afternoon, everyone. Gross revenue increased 11.3% to $759.8 million in Q3 '14 compared to $674.7 million in Q3 '14. Our gross margin in Q3 was 54.5% within our targeted range of 54% and 56%. EBITDA increased 9.4% to $93.4 million in Q3 '15 from $85.4 million in Q3 '14. Our net income increased 2.9% to $50 million in Q3 '15 compared to $48.6 million in Q3 '14. Diluted earnings per share increased 3.9% to $0.53 from $0.51 in Q3 '14. Our backlog grew by about 5% to approximately $100 million to over $2.1 billion from last quarter due to project wins, acquisitions completed in the first three quarters of the year and foreign currency impacts. While we have not met our previous organic growth target, we did achieve 6% organic revenue growth in our infrastructure business and 3.4% organic growth in our buildings business this quarter. This growth reinforces the ability to manage our business well and demonstrate positive performance overall, while experiencing retraction in energy and resources. During the second quarter we close the acquisitions of VI Engineering, VA Consulting and on October 30, FST. And this morning we announced the planned acquisition of the America's infrastructure division of KBR which we expect to close in December. We declared a cash dividend of $0.105 per share, payable on January 14, 2016, to shareholders of record on December 31, 2015. And today we finally we announced our intention to repurchase up to 4% of our stock to a normal course issuer bid filed and approved by the Toronto Stock Exchange commencing on November 10. From time to time we believe the market share or the market price of our shares does not fully reflect the value of the business and our future prospects. We believe this is an appropriate use of available funds consistent with maintaining balance sheet strength and our capital deployment and growth strategies all of which are designed to enhance shareholder returns. Overall we have demonstrated revenue and earnings growth and have executed well, resulting in a positive quarter. Bob?

Thanks, Dad. I will now touch on some of our highlights from the third quarter then speak to outlook. Regionally Canada primarily over – is still being challenged by lower and unstable commodity prices. While our energy and resources business continues to experience significant organic revenue retraction, infrastructure saw a strong growth organic revenue growth in all business lines. Our Dessau acquisition integration has gone very well, generating new opportunities across geographies and buildings and infrastructure. We are also seeing success in P3 projects across Canada. In the US, we experienced a significant increase in gross revenue in Q3, and saw good improvement in our backlog. While this region also continues to be impacted by the downturn in oil and gas, we are securing great opportunities in infrastructure. Our housing market continues to show stead growth, especially in Florida and California where our community development services have been high demand. We also continue to see growth in the transportation sector, despite uncertainty around the long-term funding for the better of highway transportation program. Internationally, our overall revenues were relatively flat this quarter compared to Q3 '14. We retracted organically due the completion of some large Middle East projects last year. However, we have had great success securing new healthcare and other buildings projects in the Middle East and in the UK. Our mining operations have been impacted by low commodity prices, offsetting some of the growth in buildings. Now on to building business operating units. Our buildings group saw strong growth in our Canadian and international operations and remained stable in the United States. Gross revenues significantly increased due to the previous completed acquisitions, organic growth and foreign exchange. We continue to have success in the healthcare, education and commercial sectors. We are leveraging our recent acquisitions to secure opportunities,…

Thank you. [Operator Instructions] And our first question will come from the line of Yuri Lynk of Canaccord Genuity. Please go ahead.

Hey, good afternoon guys.

Hi, Yuri.

Hi. Just a quick one from me on the oil and gas, perhaps a little bit more color on the stability that you saw and the source of that stability, I mean, is it - all that’s was going to be cancelled, get cancelled and you kind of saw a continuation of projects from the second quarter, I don’t know if that’s right or not, but you can correct me. And secondly, in conjunction with that, can you speak to any level of backlog, I don’t know if you disclosed that or not, or bookings, so we kind of get a feel for where that business is on a go forward basis?

So, to answer the first question, you're basically right, all the projects have been cancelled, have been cancelled. What we're working on now is new projects that are bringing forward and there is projects and more of an exploratory nature. With regards to the backlog, no, we don’t disclose it. But we've always said in this case its still the same, our backlog basically matches our revenue pretty close on. So that what we have in backlog is matching our revenue going forward, pretty much in percentages that we have generally. But we don’t disclose the numbers specifically.

The backlog in infrastructure, buildings is certainly up and still pretty flat, equivalent in energy and resources.

Flat sequentially, yes.

Yes.

And I mean, when – I guess these projects are going to phase throughout this quarter and then the 2016, we are not facing any kind of cliff or anything like that in terms of role off?

I think we've gone off the cliff that was our experience in Q1 and Q2. We see Q3 and Q4 not hitting the cliff of any kind. It is still going to be dependent what happens to oil prices. It’s going to be dependent on how our clients bring projects. But I certainly don’t think there is cliff there.

Great. Last from me, just broadly on infrastructure and buildings, they did have good quarters, but was there anything – did either segment, particularly buildings experienced any kind of delays in some projects getting off the ground or did both of those perform as expected?

I'd say they perform as expected, buildings was a little bit – they won a lot of work, but they actually stop working on the work. We actually have signed a contract and have the client to see. So there was some delays in that, that’s not unexpected though, that is part of that business. But I'd say that would be the one area that was slightly affected in Q3, as result of some projects being awarded they are not proceeding. We still expect them to proceed, its just they are longer for clients to actually get to the point of closing in the proceedings.

Great. That’s it from me. Thanks.

Thanks, Yuri.

And your next question will come from Anthony Zicha with Scotiabank. Please go ahead.

Hi, good afternoon.

Hi, Anthony.

Bob, follow up question to Yuri's, the double-digit growth previously expected in infrastructure and buildings to attain modest organic growth, this year wasn’t achieved, like what's changed the between Q2 and Q3?

I don’t know if anything really changed, I mean, it was going towards, and went to our leadership, we asked them what their expectations were with regard to projects that they were chasing projects that they know they had one project that they were being short listed for and proceeding with. Based on that information, we did a forecast. So what would have happened is, we're probably weren’t as successful in [indiscernible] win on some of those and as I said in buildings, I think a lot clients has moved a lot slower in advancing their projects. So as we said in the second quarter, a lot of stars have to align to do that. We are pretty optimistic, but probably more – little bit – more optimistic than we probably should have been. We've still got very good organic growth in those, but not the double-digits that we thought we could get.

In those two segments, and then in oil and gas the commodity prices continue to decline since the end of June and even to the point of our conference call and after that in August. So I think the weep is oil and gas discontinued to drive that retraction.

And actually just one more comment on infrastructure, a lot of the projects, specially in United States, I am not sure we're seeing some really significant growth and some significant opportunities, with some larger projects, designed build projects, those projects has not been awarded. They still are out there, those design build projects were paused, those projects were just – and took longer to come to a conclusion on the clients, design build in the state, so an extremely large opportunity for us still.

Okay. And have your views changed on the amount of prospects or opportunities in North America, compared to where we were last quarter and also could you give us some more color of business update in terms of California and the US West? Is that really a growth engine that’s going to push up the US?

I think if you ask the people of California they would say yes. I think there is two opportunities that I think we're seeing in – and if you specifically talking about the US and more specifically about California, is the water business, which is got funding there. That funding is coming to some decisions that have to be made, and that will made in the latter part of its fourth quarter. That’s going to create some significant opportunities for us in California. The second one is just community development. We're starting to see the housing market in the United States increase. California is certainly was always a large growth opportunity for us and continues to be. So overall in the United States, and answering the first question, yes, we're still extremely bullish on the opportunities we see in the US with the amount of growth and acquisitions we've done there in the past five years. Its nice to see the economy finally providing us some opportunities we can take advantage of.

Great. And last question, what about the competitive landscape, both in US and Canada, are you seeing any changes?

No, I've been in this business quite too long, all that’s competition. Its always there certainly in the oil and gas business whenever you have the downturn in commodity prices the clients need to find the best way to get there efficiencies up, but that is more of a client focus rather than competition. We've always had this competition, we always will. We haven’t seen a significant change in that landscape.

Okay. Well, thank you very much.

Welcome, Anthony.

And you next question will come the line of Bert Powell of BMO Capital Markets. Please go ahead.

Yes, thanks, Hey, Bob and Dan. The margins in the – the gross margins in the energy business were actually up quarter-over-quarter which is a little bit surprising and then seem to be a lot of color in the MD&A around that. So I am wondering if you could just talk a little bit about why that was, given the collapse.

Well, first off, thanks for pointing that out, it always left out. Some success pointed out in a declining market, you tend to focus very hard on your business and what you have and on the staffing levels. That group it does a very good job at that, the more you focus the more efficient you become. So I think we have the ability of looking at that business and understanding and what was happening in there with their staff. The other point of maintaining those margins was really the ability of moving staff into other areas. So we are very quickly either you deal with the staff or the very staff you have the – you want to keep, we're able to move them to some other the business operating units, which then maintains your margins in your oil and gas business. So that now you know, your good staff you want to keep, we are able to keep them busy in other areas. So that’s contributes to having some strong margins in a declining market. It is pretty similar to what we experienced when we went through this in urban land at the late 90s, nearly 2009 and '10, as that business was retracting, we actually got better gross margins. It just allows you to focus when your work is retracting you spend a lot of time in focusing on what – where you need to place your people, you don’t have a lot of business development expenses, because fairly the truth is not with a lot work out there. So all that contributes to us being able to maintain our margins well.

Okay. That’s great. Thanks for that. And then just in Canada in its entirety, what's the mix today between public work for you guys versus the private sector?

Okay. Overall it’s certainly higher in the private side of the business now. And I would say in Canada this would be a rough guess for it or probably close to it, it would be around 70% of our business would be private, 30% public. Now there is a bid of an explanation there because some of are working in Canada and certainly more in encountered in the US, a lot of our infrastructure work and even some of our water work and some of our buildings work is done through a P3 model. So in that case our clients is a private client, being specifically a concessionaire or a contractor, but really the fundings is coming from the public sector for those projects. So its usable little bit, so 70-30 based on the client mix, based on where the funding come from, its probably closer to 60-40.

Okay. That’s helpful. And just – so I am just trying to figure out for Canada, I know the oil and gas staff is been a direct impact, but I was trying figure out the collateral impacts as well, because in the quarter you talked about the development activities in Alberta still continue to be strong, its seems not realistic that that would continue. So I am just trying to think about '16 a little bit, I know you're not giving guidance today, but how are you guys thinking about the rest of the business is it collaterally associated with them, energy and resources?

I can try to answer that by telling you where we are today, you're absolutely right, one of our concerns for Q3 was that how much of our business outside of oil and gas in Western Canada was going to be impacted. And it was surprisingly low, and certainly Calgary. The community development of part what we do, which is a lot of Greenfield urban development, that was impacted, that certainly has slowed. But I mean, for some reason that doesn’t has been somewhat excluded from that – like Alberta picture mainly because I think that is some sort of a lot of development going on downtown and projects associated with downtown redevelopment and which is very busy for us. So both from a building standpoint, infrastructure and community development, all those areas are very busy actually in Northern Alberta as a result of those happening, and in Edmonton. So because of that I think it has lesser of a collateral damage. Going forward to 2016, all I can say there is that, that development opportunities and redevelopments of downtown in Edmonton is continuing strong into 2016. Those projects aren’t delayed. They are still turning on and so we'll continue to be fairly busy in Northern Alberta on those. And I think we've reached the business steady state potentially in Calgary, but you know, the potential there is community development could be further impacted anytime, how long oil and gas remains low.

Okay. And just last question, on international, the Middle East I think was noted as an area where you see some strength, that too seems a little bit challenged in area given the reliance on oil price to fund a lot of the – the programs in that market and my sense is they are pulling back, so its seems a little bit at odds with your outlook there?

Yes, I think they are pulling back, but they are also still going ahead. I would say at a smaller scale, very good examples and projects we're working for in Qatar where they are working on a very, very large healthcare project, a cancer center. They have scaled the project back about 20%, but they are still proceeding with the project. So it is a very large project, but before oil class it was an extremely hard project. So they are still going ahead. There some investments that they have to make in those countries and especially around healthcare that they are proceeding with. So we - I think they are in the right place and in the right sector based on that.

Okay. That’s helpful. Thanks, Bob, thanks, Dan.

You're welcome.

Your next question will come from the line of Tahira Afzal of KeyBanc. Please go ahead.

Hi, folks.

Hi, Tahira.

And so and if I look at some of the announcements that came out today, it seems like there is a little more optimism on transportation though finally going through in the US, and so I'd love to get your thoughts, I know I asked you this last quarter. But the – it also here seems like it might actually happen. If I look at the level of spending implied, they are only up 2% but it could be a bill that obviously stands many years. Can you put into perspective, maybe how important it is that long-term bill versus really the actual levels of increase per annum?

Well, you're right. The good news, the good news is, they actually got something passed that is more than six months, so a fixed year bill is great. That has three years of relatively secured funding, it is great. The bad news is that funding really isn’t increased. So it’s not nearly enough to get excited about. We do have to get excited about the fact that there has been a longer term funding for else, that allows clients to at least do some planning, longer scale planning. Certainly that getting through the next two hoops of approvals, we'll still be an issue, but the big part was actually getting the first hoop approved. So that’s great news. I think that our clients – the good news is our opportunities in transportation have been very strong year-to-date. This will only help them. Certainly this is only to provide even more opportunity. So, certainly good news, but we even had a very good year-to-date without this news, so this nice to hear.

Got it, okay. And then are you more excited about the community development side of the business, and you've talked about it, couple of years back, you've been watching it for a while? And if I recall correctly, you've said that’s going to grow, it can grow exponentially. Is that still the case, is that the market we should look out of your sales into the next year?

Yes. I don’t think that’s going be a dramatic change over the next quarter, but definitely I think the word you used exponentially is exactly that. Once that people start getting comfortable and start buying houses, it seems to ramp up at a very rapid rate. And we're probably the only firm in our space that really focuses on this side of the market that Greenfield, single family, multi family, commercial development across North America. It was a very large part of our business. It’s back up to almost the $300 million business again, and we're certainly very optimistic that we don’t see really any constraints going forward that’s going to stop that. It’s just a matter of how quickly it ramps up, but we've seen quarter-over-quarter growth and quarter-over-quarter opportunities in that business in the US. And with everything we've seen in the US we just can't see that stopping.

Got it. And last question for you folks, you've seen a very notable decline on the oil and gas side, do you think your comps now going forward, its just not easier, in a sense, you've got these other markets taking off and hopefully the oil and gas side have probably seen the worst?

Yes, I think we've seen the worst of the retraction Tahira. We will still be comparing in Q4 and Q1 likely to slightly higher comps. We've stabilized as we said we were going to do it at the end of the second quarter when revenues are pretty flat, second and third quarter for this year, don’t expect a major increase in that. So slowly compare it slightly higher comps in the first half, last part of 2015 and first half of 2016.

Thank you very much.

Okay.

Thanks, Tahira

Your next question will come from the line of Ben Cherniavsky of Raymond James. Please go ahead.

Hi, guys.

Hey, Ben.

I suspect with people around, I haven’t seen anymore concerned with the oilers [ph] than and oil given what happen to make [indiscernible]

Yes, this one things start to look good, they threw another challenge in front of us.

And they are still going to build the rank though I guess?

Yes, they are too far long the stop us.

Well, on that note, just wondering your energy business, like you suffered obviously a big contraction there and you've adjusted your cost structure and maintained your margins very well, which is I know something you guys are always very focused on. But how much more room, like let's just say, there was another leg down in oil prices and in the activity that you're seeing if we're not at the bottom. How much more room do you have to adjust your cost base and sustain your margins without cutting into the bone so to speak and basically you know, at what point do you risk sort of decisions about just closing offices and shutting up and going home and exiting the practice because its just not viable to be there?

Yes, so can answer the last part real definitively, we're in it still long-term. We're certainly not worried about a collapse that’s going to force us to really exit that market. I think we've done a number of things already and still maintain our margins and invested in that business, looking at ways of diversifying within that market. And so just let’s put it on the context, first off, its 15% of our business today now, so we're talking 15% of bulk half of that is environmental services and half of that engineering. Environmental services I think, we've seen probably the worst. Environmental services, client are now still looking at investing and getting permitting, we're still looking at routing. We have an LNG side of that, that’s very focused on those projects, those projects are continuing to advance. So half of that 15% we think is pretty solid, and somewhat insolated from any further retraction in oil prices. The engineering part, certainly, but there is so much our clients will stop working even they will delay some capital programs. They will still invest in looking at our cat changes efficiencies. So another 10% or 15%, 20% reduction of that 15% it means an overall 3%, 4% reduction in their overall company, which is relatively insignificant and we can manage our way through it. So bottom line is, I think we're overly concerned about now the length of time, that would be nice if they came back, but I think we're now a relatively good steady state and any further retractions is not going have a dramatic impact. And again, its all we feel is going to be offset by continued growth infrastructure and in buildings.

I look at how you think another retraction wouldn’t impact your labor utilization rates go down and you'd have offices, you got to keep the lights on…

No we'll keep the lights on, but the lights are – there is other people paying for lights too, because our offices are shared with a lot of others, probably only have dedicated office for oil and gas and Bakersfield, and Bakersfield we're comfortable where we are there. But again, if that retraction does require us to continuously lay off some staff, we would look at that, but certainly we right now are looking at any further retraction, we like to keep those people busy or going through retraining those in other areas and moving them into other groups. And we're going to make commitment of trying to do that as much as we can. So we feel we can – if there is another retraction, we can manage our way through it, just like we've managed through this retraction, thus not nearly going significant.

Right. And if we are lower for longer or even those lower from here, there is no – you guys, like what are the risks of an impairment charge from the acquisitions you did in that segment, in that practice area?

All right. And that relates safety, but I can't think, Dan, maybe you can, no I can't think of…

We look at the indicators of impairment every quarter Ben, certainly in Canada there is no concerns around impairment. If we look closely around goodwill impairment every quarter by doing our annual review. This quarter for our US, we don’t carry any goodwill internationally. So – but at this point, there is no indicator that would suggest we have an impairment.

That’s great. And good to see the buyback in the two. Thanks a lot.

Okay. Thanks, Benefit.

Your next question will come from the line of Sara OBrien of RBC. Please go ahead.

Hi, good afternoon. I think you guys made the comment that there is a lot more smaller jobs in the energy segment and oil and gas now, I just wondered what's the margin outlook on those, more competitive environment and would you expect any difference in margin going forward?

No, I don’t think so, we went through the first round and with our clients with regards to reducing rates, and try and get down to – or make them more efficient. We've really done that round of reductions in the second quarter. I don’t see really probably less concerns that competitive environment going forward, more concerns just about the amount of work they give us. So don’t see the competition or a rate issue, as we said in our conference call, we're really happy about the fact that we've maintained our client relationships and its jus a matter of how much work do we know at this point in time.

Okay. And then turning to the US market, just wondered what's your – where are you most optimistic going into with bookings that are going are now, is it the design build in the US, is it the infrastructure, if you can comment a bit about those?

I'd like to say its – we're optimistic about everything in US, but I think design build, transportation is a very strong market and in number of states I think we have to reference to the fact that we announced this morning about the KBR acquisition of their transportation group. In Texas they are busy and design build in the Texas market which is very strong, that was one of the reasons we wanted to complete that transaction. So definitely transportation in design build is extremely strong in the United States Our water business continues to be strong in the US and its expanding as a result of resiliency and flood protection efforts. So not only is it growing in the more traditional water and wastewater area, but we're seeing that opportunities in flood control mitigation resiliency. So those definitely are all bundled into infrastructure, along with community development as well, so I'd to say, really the community development area and infrastructure is strong. Texas is great for us now, it’s a state we wanted to get into for years as we've been messaging now with our acquisition in SHW last year. Their focus in the [indiscernible] and the bond issues were completed in earlier this week and there is hundreds of millions of dollars of bond approved that which stands like its benefiting the benefit of that, working with school board. So there is a lot of areas that in United States we're extremely optimistic about.

Okay. Great. And then maybe just lastly on acquisitions, you had previously commented that there is other areas of oil and gas, pockets that are quite strong in the US, in pipeline type work, just wondered what the pipeline of acquisition opportunities is for them?

No, intended…

Yes…

Good, I mean, we've been focused on that now for a number of years, I would like to say that we can hopefully do something in the short term, but certainly we're still very optimistic that we can do something in that area in the United States over the next several months. Its just lots of opportunities, but certainly that business is difficult business to get into in the US, but certainly we're still optimistic we can do something.

And that’s when where you could lever your – leverage you talent in the Canadian market?

Absolutely, talent and dollar.

Okay. Thank you.

You're welcome.

Your next question will come from the line of Mona Nazir with Laurentian Bank. Please go ahead.

Good afternoon.

Hi, Mona.

Hi. So my first question is just turning to the geographic growth, in Canada we're seeing increased infrastructure spend and up tick in P3 projects, but a weak commodity price environment, in the US we're seeing economic rebound and US transportation goes promising. Now you did speak to growth opportunities in the US, but if you could speak to opportunities in Canada particularly in the buildings and infrastructure space that would be great?

I think what the change in the federal government is certainly from a infrastructure perspective, and you've got be optimistic, they build their platform and around a significant increase in infrastructure spending. Albeit, some of that was backend loaded, but certainly their focus infrastructure I would say a good news to our transportation and water business across Canada. I guess, the one point I like to drive home is that, we do have offices coast to coast. We have almost 100 offices in Canada, in every province and that allow us to access both provincial and municipal opportunity. So we see ourselves being very well positioned in the Canadian market to take advantage of that focus, with the government now has on infrastructure. In Alberta the same thing, even thought that province is been obviously hit hard with – as result of the oil prices. The new government is certainly focused on investing in infrastructure and school. So that’s all good news for us, I mean, that’s heart and soul of our company's infrastructure, so we certainly see that as a boost to our Canadian business. On the building side, that the continued focus on P3s in Ontario and British Columbia it is also good news for us is that’s a strong market for us. So overall I think all the recent news in Canada I see as a benefit sustains there.

Okay. And just secondly from me, on M&A we continue to see a steady flow on tuck-ins, just given your significant financial flexibility and low leverage, any thoughts on speeding up the M&A strategy perhaps to off that potentially weaker organic growth and given FX is stabilizing?

I don’t think we ever look at our acquisition strategies offsetting, our strategy is all its been very consistent. We look at a wide range of companies from a perspective of geography and size. We've always have desire of doing larger acquisitions and as you say, we have the capability of doing it, it’s a matter of finding firms that want to join you and there is just less firms that are larger in the United States and Canada. The firms that we have been acquiring are those types of firms that get a point with revolution, where they need to do something and joining a larger platform is a great solution to some of the issues they face in growth. So really our strategy is been consistent, I don’t think our strategy gets adjusted by what's going on in the economy, are going on with regards to others, we're really focused on remaining disciplined in that acquisition strategy which we've been.

Okay. Thank you.

You're welcome.

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

Good afternoon. Just I had a follow up here on your backlog, maybe talk little bit, I am not sure if you look at this, wave it on a same store basis, what that backlog look compared to say year ago, or even last quarter? I am trying to get an idea what the acquisitions that are to backlog?

Yes, we don’t really refer to a same store, that’s – don’t really look at it from the perspective of those specifically what geography, that that’s coming from, but certainly we have seen an up tick in our backlog, in our infrastructure buildings units, probably about a third or more – around a third of that backlog is certainly organic growth, some of that about 20% probably is around FX growth and the rest would be through acquisition.

That’s helpful. And then maybe if you can talk little bit about EBITDA margins and specifically there the move into the US, how should we be thinking about EBITDA margins on a go forward basis, are we going to see a compression here, as we see more work on the US transportation side?

It’s not just a US story, it’s a combination of the mix of business, because transportation for example in both Canada and the US is a lower margin business. But certainly in the US our overhead cost we have talked about this before, is particularly around labor, benefit cost is higher in the US, you would expect to see somewhat of a traction in EBITDA margins as we grow forward. Its not going be material thought Jacob, its not like its going to be 3% or 4%, 5% reductions, its going to be incremental over time.

Okay. And maybe just lastly, provide us bit of an update on how you're looking at international acquisitions?

International process it’s probably in our feature, I would its much shorter term features, than it has been in the past, because as we continue mature in the US then we need to start looking at augmenting that. And I think we've been messaging over the last several months. Now that’s coming to a point where we see, starting to look at international acquisitions in the next 24 months, two years or three years. I think in the short term we're going to try to get familiar with what's going on in international market where we fit, where would be the right entry point for us, what geographies, what sectors, what types of companies we would be interested in. Now that’s going to take some research and time, so I don’t see it happening overnight, or in a short time, but certainly in the next couple of years I think you can start seeing us augment our North American strategy by looking it outside of North America, but still couple of years away.

Thank you very much

You're welcome.

Your next question will come from the line of John Rogers of D.A. Davidson. Please go ahead.

Hi, good afternoon.

Hey, John.

Just a couple of follow ups, first of all in the terms of the backlog growth, we've seen now running ahead of revenue growth, is that just longer length of the projects, especially on the infrastructure side, you know, was that precursor of the needle, some acceleration here?

No, I don’t think its, it got anything to do with the length of projects John, its just a precursor to – nearest to growth that we've seen historically in infrastructure in our US operations.

Okay. And then in terms of the acquisitions and the KBR and I forget the other one, subsequent to the end of the quarter, the businesses that you're looking and I guess, especially on the infrastructure side, is it very complementary what you're already doing or does this put more into construction management than its typical?

No, no, both of these - FST was the one we closed subsequent to the quarter and KBR, both of those are very, very similar to what we do right now. FST brings us just a much higher degree of water capabilities in certain areas of New England and transportation they all ramp up, we have there already and really increases our position in that area of the county. And KBR is just clearly water and transportation geography positing for us in a very, very state, and that invest money on those areas. So none of this is moving us further into construction, none of these guys different then what we today.

Okay. And Bob just in terms of the pipeline of acquisitions, is still the standard targeting a lot of people or?

Yes, I mean, it’s still busy. The pipeline is still full. We're in a – I think from a certain performance in the NVO we'll position because we're known as very exquisite company. We tried ourselves and our ability been able to integrate companies well. We've got lots of very good companies that we're talking to and a lot of very good companies who want to talk to us. So all we can say there is its been as busy as its ever been.

Okay. Thank you.

You're welcome.

Your next question will come from the line of Benoit Poirier of Desjardins Capital Markets. Please go ahead.

Yes. Thank you very much and good afternoon, gentlemen.

Hello, Benoit.

Just to come back on the federal election and also the Alberta budget, obviously positive milestones for you, but looking at your experience what is the delay or how long does it take before it flows through revenues and a backlog?

I mean, its going to take a while to flow the revenues and we're probably going to see really no significant change in that arena until next year and I would say probably no significant change into revenues until maybe even the second half of next year. It takes government a long time to get their act together and start acting on lot of campaign promises. But what it does do is the existing project in that pipeline, the existing projects that the potential government, federal government were thinking about will get accelerated. So some of that will impact the first half, but it will take some time to get some significant up tick into our business. The good news is we don’t see anything stopping that, it’s just a matter of how long, but a couple of quarters before you start seeing them.

Okay. And you mentioned good color about the transportation bill obviously there was a lot of discussion in the last few days, now given that the needs are still there, we seeing to exit the current funding, do you think there will be basically more P3 opportunities down the road in the US and is it something that you want to strengthen over time?

Yes, we –I can go on for half an hour and talk about the P3 opportunities and that market is in the US. Federal bill probably is not going to change that thinking significantly in the US the P3 market is still what I would call somewhat noisy in the United States, now that doesn’t mean there is not opportunities, its just you got to be careful of which opportunities you chase. Funding bill, probably is not going affect us because the P3s in the United States are looking outside of any typical traditional public sector funding to build infrastructure. So in the United States I almost see them as very two separate buckets. So the bills are good thing, then talking about it and actually getting something approved with this thing, but I don’t see a change in the landscape significantly, in either P3s or in the typical public sector funding.

Okay. Very good. And you mentioned a good color about the inability to achieve double-digit growth in infrastructure and still being although it was still very solid. I was just wondering looking at the architecture buildings and that was out in the last three months, there was a slowdown before its ramp in September. I was wondering how much of the read [ph] through is it on your infrastructure and building business?

Not that much, I mean, we've been questioned that in the past about that index, we don’t see a significant amount of correlation between that index and the opportunities we see. So all we can say right now is that our buildings business is extremely busy getting on projects, getting ready for projects. So that index has been decreasing, even the fact why I am not aware of that short affect' so we don’t pay that much attention to it.

Okay. And related to share buyback, I mean, it’s a change versus your comments you made in Q2, I was wondering what was the main driver, was it more the comment about – the fact that stock price went down, more confidence about your outlook, what drove the change in your – you about the MCIB?

I don’t think there was really change in the view around the MCIB, we didn’t say and indicate that we're looking at it, we continue to look at it. In this quarter we – yes, the share price declined, did have an impact. We look at the materiality of the impact, we look we're our multiples are, we look at what our capital allocation is and we look at our long-term prospects. And we think there is some value there and brought forward to the board and got it approved this quarter.

Okay. And maybe last question, Dan, when we look at your working capital items, if you recall in Q1 there was a significant drag for few reasons, almost $150 million, I was just wondering whether we should expect a deep reversal to us in Q4 to make kind of the working cap change neutral for the whole year?

So this with reference to cash from operations?

Yes, its really the change in non-cash working cap, there was a big drag in Q1, so you gave some very good color at that time, but I was wondering given your perspective in Q2 and Q3, whether we should expect a positive reversal in Q4?

Yes, I would expect to see a bit of improvement in Q4 in our day sales outstanding, our [indiscernible] outstanding, so we should see that come down a little bit, I believe we're at a 103 days at the end of Q3. That is fairly typical if you look at the seasonality of our business year-over-year, it is a little higher this year and a lot of that has to do, not a lot of it, but portion of it has to do with the Dessau operations, whose capital is a little bit higher, just takes longer to be at milestone projects and takes longer for a public sector clients to pay. So that has an impact, but generally we do see working capital improve in the fourth quarter. It is usually pretty low in the first quarter and we should see some recovery continuing on in Q4.

Okay. Thank you very much for the time.

You're welcome, Benoit.

Your next question will come from the line of Maxim Sytchev of Dundee. Please go ahead.

Good afternoon.

Hi, Max.

Just a very quick question, are you hiring on net basis outside of oil and gas right now?

Yes. Without knowing the details of it, yes, we're hiring outside of oil and gas, yes.

And can you maybe quantify, I mean, is it 1%, 2% is that’s kind of – I mean, I know that you don’t have the number in front of you?

I would say its probably in that range, its not significant, but I would say that, 1 point to KBR acquisition that we've done and we'll be working on closing this a very, very busy firm we anticipate we will probably even have to hire people on top of that acquisition to complete the backlog that they have, so that’s good news. But I would say, its higher in the US and Canada that we're hiring.

Okay, that’s interesting. And can you remind us what is the percentage of revenue that comes outside of Alberta in Canada?

Okay, this gives you some idea, Canada West, which is I would say mainly Alberta, Alberta makes up about 20% of our overall revenue and probably makes up about 60%, 65% of our Canadian revenue. So breaking down and put perspective, Alberta is 20% of our overall revenue percent is in Alberta.

Okay. And out of the 20% I would, I guestimate that probably half of that is still kind of oil and gas related, is that a fair assumption?

Now, that figure I don’t have in my head, I have to think about that, it maybe close to half, I don’t know, Max, 20% is Alberta, that probably close to half. Its still a big part of our business, there is no doubt about it.

I guess my – my report say, as the ENG exposure kind of directly is shrinking, and buildings is growing, transportation is growing, I am not trying to withhold sort of the advance fro 2016 guidance, but it does shape sort of nicely from directionality perspective is that a - kind of a fair assessment and how you approach the budgeting in 2016 process?

I'd say that’s the first of them, yes.

Okay. Excellent. That’s it from me. Thank you very much.

Okay, thanks Max.

Your next question will come from the line of Chris Murray of AltaCorp Capital. Please go ahead.

Thanks, guys, good afternoon. Just thinking about the energy business and not only just your energy business, but I think some – even some of your clients, are you seeing any shift amongst your client base to push work that they use to be doing internally, maybe overdue, just with the entire space contracting?

No, I don’t know, I can't say that they are, that’s one question, I haven’t had our leadership tell us that they see that happening. I think our clients right now really focused on trying to be as efficient as they thought they can, and it would almost be logical to some of that efficiency, it could be achieved by pushing some work into consultant. So it sounds like a logical function, but I can't verify why that’s happening.

All right, guys. Thanks.

Thanks.

And our next question will come from the line of Michael Tupholme of TD Securities.

Thanks for the question.

Hi, Michael.

Just one question, the building segment we saw the organic growth rate slow little bit this quarter and your outlook seems fairly positive there, you did mention that in part of what happened in the quarter was some work that you – it didn’t quite come to completion or some delays in Sonny Network [ph] How quickly would you expect to sort of see that growth rate maybe pick back up and how we should we think about it, is it sort of like of the levels we saw in the earlier part of the year?

I think what you going to see Michael in buildings as we started see a pick up in that segment in Q4 of last year, I remember we started to see some turnaround in organic growth, so I am not sure you are going to see the same levels of organic growth in Q4 and into the first half of 2016.

Because of the comparable.

Because of the comp yes, but still pretty strong.

And a lot of that retraction or slower growth, we went to 3.4% growth from a quarter two of 5.7%, it was also just some projects coming to completion with also new projects coming in or replacing it. We will have those projects coming in or replacing in the fourth quarter, but Dan, its right in the fourth quarter we're going to be comparing against a stronger Q4 of 2014, so its hard to say if its going to come back to the same levels at the beginning of the year.

Okay. That’s helpful color. Thank you.

Okay. You're welcome. Thank you. Operator And we have no further questions at this time. I'd like to hand it back over to our speakers for closing remarks.

Thanks, Angel, I'd like to close our call by saying we're proud of our performance this quarter, continuing to win work, maintain client relationships and manage our business well, even in some challenging economies in some of our business. I think our long-term success really proves that that diverse model that we built over the years continues to service well, even in a period of time like this. We're confident we'll continue to deliver those results to shareholders and we look forward to speaking to you again soon. Thanks very much.

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect line. And have a great day.