Stantec Inc (STN) 2007 Q3 法說會逐字稿

Welcome to the Stantec Inc. 2007 third-quarter earnings release conference call. I would like introduced Tony Franceschini.

Thank you, Ron. Good afternoon, everyone, and welcome to our 2007 third-quarter conference call. Joining me is Don Wilson, our Chief Financial Officer.

As usual, we will comment briefly about our results and the outlook for our markets and then address individual questions. I just wanted to note we are -- Don and I are both in transit and we're using portable speakerphones, so if the communication is not quite 100%, you will understand why, but I believe that the checks we have done are that everything is well so far.

Before we begin, I would like to caution you that our discussion this afternoon will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of these forward-looking statements may involve risks and uncertainties and actual results may differ materially from those discussed in these statements. Additional information concerning the factors that could cause actual results to differ materially from those discussed in this conference call can be found in Stantec's filings with relevant securities commissions, located at SEDAR and EDGAR.

I would also like to advise you that this conference call is being broadcast live over the Internet and will be archived for future reference at Stantec.com under the Investor Relations section. Therefore, we would ask that any members of the media who are joining us today in a listen-only mode and who wish to quote anyone other than Don and me to please request permission to do so from the individual concerned.

This morning, we released the results of Stantec's operations for the third quarter of 2007. I am pleased to report continuing consistency in our performance during a very active quarter for us, which included ongoing integration of acquisitions as well as closing our new acquisitions. Gross revenue for the quarter increased 11.9% to $235.3 million from $210.2 million in the third quarter of 2006. Net revenue increased 13.7% to $207 million from $182 million. Net income increased 5.5% to $17.4 million from $16.5 million. Diluted earnings per share were 5.6% higher at $0.38 versus $0.36 for the same period last year.

On a year-to-date basis, our gross revenue is up 15.2% to $696.3 million. Net revenue is up 16.6% to $615 million. Net income is up 12.8% to $50.3 million. Diluted earnings per share are up 12.4% to $1.09.

These results reflect positively on our ability to maintain our business while continuing to integrate new acquisitions as well as the strength of our business model to adapt to changing marketing conditions in our core market of North America. During the quarter, there was some weakness in some parts of the Urban Land market, mainly in the U.S. West, as well as in some Transportation markets. These two practice areas contributed to a decrease in organic revenue of approximately $8.5 million. This decline was offset by organic growth of approximately $12 million in our other three practice areas.

Our overall mix of business among our five practice areas continues to evolve. In the third quarter, and on a trailing 12-month basis, our current mix of business is approximately 32% in Urban Land, 22% in Building, 19% in Environment, 14% in Transportation, and 13% in Industrial and Project Managing. This mix will continue to evolve with our most recent acquisitions, which are increasing our Industrial, Environmental, and Building practice areas. These acquisitions completed during the third quarter include Trico Engineering in Charleston, South Carolina, which added about 130 employees in civil engineering; Chong Partners Architecture in San Francisco, with approximately 175 employees.

At quarter-end, we also added Woodlot Alternatives, a 65-person firm based in Portland, Maine, and Neill and Gunter, a 650-employee firm primarily located in Portland, Maine, Fredericton, New Brunswick, and Halifax, Nova Scotia.

On a year-to-date basis, our overall revenue growth after accounting for the impact of foreign exchange has been approximately 65% through acquisitions and 35% through organic growth. We expect this trend to continue for the balance of the year.

I would now like to highlight some new project awards. And this quarter, I want to focus on the increasing diversity of work we are doing in the public sector. For example, we were awarded an [on-call] contract with the Tri-County Metropolitan Transportation District of Oregon to provide communication systems engineering to the Portland public transportation system. We will be responsible for designing rail central control systems, fiber-optic transmission systems, and radio and microwave systems, among other tasks. We also secured contracts to complete annual inspections of several hundred bridges in Manitoba and Colorado for Manitoba Infrastructure and Transportation and the Colorado Department of Transportation.

In the roadways sector, we're preparing the functional design of a new high-speed expressway and ring road system for the City of Red Deer in Alberta, including a new bridge crossing, railway overpasses, intersections, interchanges with major arterial roads, and other improvements. Finally, in the airport sector, we secured a contract with the state of Connecticut to provide an airport master plan update for the Groton-New London Airport in Groton.

Our planning and landscape architecture practice is continuing to expand in the public sector. For example, we secured an assignment with the California Department Of General Services to provide civil engineering and landscape architecture services for the development of a new energy plant that will supply heating and cooling for 23 state buildings, including the state capital in Sacramento. The project also calls on our expertise and background in LEED leadership in environmental and energy design and sustainable design consulting, as well as surveying, and is targeted to achieve a LEED gold certification.

New public sector work in the Environment area includes an on-call contract with the City of Anaheim in California to provide a range of services, hydraulic modeling, landscape architecture, planning, design, surveying, and construction management for water and sewer treatment, pipeline, pump station, and reservoir infrastructure. In addition, we are also designing an expansion of the Eagle Mountain Water Reclamation facility plant for the City of Eagle Mountain in Utah. The design will include the use of cannibal solids reduction, an innovative new process that eliminates the biological solids produced by activated sludge wastewater treatment systems.

During the quarter, work continued on the restoration and rehabilitation of the interior of New York City Hall, a historic landmark for the New York City Department of Citywide Administrative Services. This assignment brings together our expertise in architecture, structural engineering, preservation and restoration, high-definition scanning, and sustainable design consulting and filing for LEED certification. We are also providing architecture and civil mechanical, electrical, and plumbing engineering services for the Burnaby Mountain Sports and Medical Center project at Simon Fraser University in Vancouver, British Columbia. Our design will incorporate energy-efficient features to lessen the ecological footprint of the new facility.

One notable new project award that I would like to mention in the private sector is an assignment to provide engineering and consulting services for the support infrastructure at the Athabasca Upgrader, which is a bitumen processing facility in northern Alberta owned by Total E&P Canada. The scope of work is quite encompassing and will draw on expertise from several of our practice areas.

Now to address our outlook for the remainder of 2007, overall the outlook is positive. As indicated previously, the Urban Land market has slowed, however we have generally been able to mitigate the impact. We have seen a reduction in our year-to-date organic growth of approximately $12 million, or 5.6%, in this practice area. This has all been principally in the U.S., where the decline in housing starts has affected internal growth in our U.S. Urban Land operation. However housing starts in Canada, which accounts for about 40% of our business, are less impacted and the market in Canada remains stable. These trends are expected to continue through 2008 with improvements anticipated in 2009.

We have also had a modest organic growth decline of about $3.5 million in the Transportation sector. Now, in this case, this is not a market-related influence, but rather a timing issue for us on some significant projects which were coming to close and a lag prior to other projects coming on stream. This situation is expected to improve in Q4 and into Q1 '08.

These reductions in these two practice areas have been offset by good internal growth in the Industrial, Environment, and the Buildings practice area of approximately $5 million -- $5 million net. In particular the industrial market is strong, especially in energy and resources in our homebase in Alberta, where we expect continued strong organic growth. The environmental market is also quite strong in Canada and the United States, principally driven by some regulatory requirements as well as our improved presence in a number of market areas, including the West Coast market in California.

So these are just some of the reasons why we continue to be optimistic about our prospects for the balance of '07 and into next year. Our business model has always been based on assuming that three or four of our key practice areas are doing well and that we always expected one or two will not be doing as well as the rest. Obviously it's some of the market factors in transportation and -- or at least in terms of some of the new projects coming on stream, but particularly if the housing market improves, then our performance will improve substantially as well.

This concludes our brief comments for today. Don and I will now be available to answer any questions from the floor, and the conference call operator, Ron, will explain the question procedure.

(OPERATOR INSTRUCTIONS) Anthony Zicha, Scotia Capital Montreal.

With reference to the California market, can you give us an update on California and how The Keith Companies has progressed to date and maybe if you can compare California versus the East Coast U.S. in terms of activity and progress and maybe some perspective.

Well, I can certainly give you a little bit of insight. As far as the California market, if we look at the old -- again, it has now been two years, so we do not refer to it as such, but if you look at kind of the old Keith Companies' market, the portion that was related to Urban Land, which was about 70% of the business that The Keith Companies was due income of that business has declined in '07 overall compared to '05. '06 was generally on track, but in '07 we've seen a reduction. I think on a percentage basis, it is running -- if you just look at the old Keith operations -- maybe about 10 to 12% lower than what was there before.

So given the changes that have occurred in the marketplace, I believe at the macro level housing starts are down roughly 20% or so in the California marketplace, so we have been impacted, but not to the same extent as the reduction in housing starts at the macro level. We -- our plan with Keith was always to use it as a catalyst to start to expand the public sector business, and I think that we are making inroads. I highlighted one of the projects that we got this quarter and there are more that we've been getting in the environmental area.

We are little bit slower in the transportation side, although, again, from a business development perspective and from the ability to compete favorably on jobs, we are doing much better. We just do not have any results to show for it yet on the transportation side. But we absolutely expect to be able to get some of these more significant assignments and do well in the transportation area in California, as well.

So I think our plan of using the physical base and then expanding into the public sector is working. We may be a little behind in terms of some specific jobs in the transportation area, but we have made tremendous inroads and we will see the fruits of that investment in '08 for sure.

As far as the U.S. East is concerned, that is still our weakest operation of the three areas. If you look at Canada, U.S. West, and U.S. East, and there's just a few more challenges there in terms of the integration of the companies. If you look over the last year or so, we have done quite a bit of acquisitions in the East. So there is a little bit more disruptions of day-to-day operations as we integrate the businesses so that they are contributing. They're not losing money. They are contributing to the bottom line, but they can certainly do better. And as we continue to integrate, continue to look at areas -- we can look at some G&A reductions, which is really where all the costs are, our highest G&A costs are in the East. I think that the prospects for the East look the best in terms of on an improvement basis for '08.

We are doing quite well in Canada, so if you look at the U.S., it is really a matter of the U.S. East as we integrate, as we get more mass, and as we take a look at some of the offices. There is some consolidation going on, so there is quite a bit of activity which should help our performance in '08.

Tony, on that same topic, what about the pricing power, the pricing trend? Is it edging upwards and could we anticipate that your margin run rate should have a positive impact going forward?

Depends on the markets. I think in Canada we could say we have favorable position. Certainly in the U.S. West and the Urban Land markets, as you have seen, we have a slight deterioration. It is modest, but we certainly had a modest deterioration in the gross margin in the West.

In the East, because it is more focused on public sector, that generally starts with a little bit lower margin. So there is an opportunity to improve the margin in the U.S. East, but in the U.S. West until we start to get into a more substantial position the some of those other practice areas, we are likely going to be in the same range of margins than we are right now.

One last question. With reference to acquisitions, the availability is still pretty good out there and maybe you can answer what are your lines of credit available to proceed with acquisitions?

As far as -- Don can fill in -- we still have our existing line of credit of $160 million and we still have substantial amount of that available to us. Certainly over $100 million of that is still available to us and we certainly have the ability to increase that if necessary.

The expectation is that we do have actually quite a few acquisitions in the pipeline that we have been quite busy on that front, not only from the ones we party done this year, but actually the pipeline in terms of acquisitions that are closer to being closed is probably as high as it has been over the last two years. So the prospects are actually still very good. And we certainly expect to be able to meet our growth targets, certainly on the acquisitions side, and hopefully as well on the organic side.

Thank you, Tony.

Bert Powell, BMO Capital Markets.

Tony, just in terms of the credit markets, have you seen much of a change? Obviously you know what is going on on the residential housing market, but have seen that much change in the opportunity set related to was going on there?

Yes and no, and I say that with a little caution is that their is certainly, from our point of view -- if I understand your question -- there is an opportunity, say, in terms of acquisition of firms that would be primarily in that markets. Clearly there has been -- there are a number of firms that have been focused in that market that are available and have expressed an interest in terms of the sale.

In terms of the opportunity, has that translated from a more favorable pricing, not yet, because -- or at least in general, it has not. There are a few exceptions, but the expectations are still that, well, you know, we have done really well in the past, so they really want to look at trailing performance rather than forward performance, the opposite of what people expect.

So it is not as good as you would think yet, but I think that it is almost -- the attitude seems to be changing by the market, you know, like -- I think for some people they thought this was going to be maybe was not going to last as long, but as the market continues to kind of stay where it is and its flat, if you look at total housing starts in Canada and the U.S. -- and we track single-family housing, not total starts -- it is at the one million units or so range and it peaked in January '06 at about 1.7, 1.8 million. So it has been on a gradual decline, but the decline has been less, but has kind of stabilized around the one million units over the last few months.

So I think as people realize maybe that is not going to jump back up to 1.8 right away, then I think opportunities will open up.

Okay, from the revenue perspective, have you seen much change in terms of the projects your bidding on? Are used seeing perhaps things getting pushed out a little further or projects that were going to go getting yanked? Have you seen much of an impact on that side?

Well, it is clearly happening. There are some of all of the things that you mentioned. Some projects are being put on hold as clients are not sure. Some clients are tending to make shorter-term decisions. But that is for a portion of our business, but we are fortunate in that we still have a lot of good long-term player type clients who are taking a longer-term view.

And what is happening is the planning, the approvals, the entitlement, the master planning, that sort of work, that work is not being affected as much. Where we are seeing the impact and the areas where we're seeing the slowdown is really in sort of the construction phase, which is where they are actually moving dirt and putting pipes in the ground for new subdivisions on the single-family side. That part of the business is being impacted more.

Now, the way we cope with that -- at least to the extent that we have as reflected in our numbers -- is that we are certainly doing more commercial work, which has not been impacted as much as the single-family housing, as well, as I indicated, even in the landscape architecture. We have been actually quite successful in shifting some of the capabilities we had in that area into the public sector. So we were able to utilize our staff, for the most part, and that is the way we have hoped so far.

So do you expect the mix shift between your public and private business to move significantly this year because of this?

Not significantly. The kinds of shifts that are occurring are four, 5% either way, but we're not going to see a material shift, if that is the word that you would use. But there is clearly more of a shift into the public, because at least as far as the single-family and the urban development is concerned, but on the other hand on the private side, the industrial, which is all private work, is actually -- is our fastest-growing organic area. So it is kind of offsetting, for the most part, any of the reductions we have in the private side on the housing side, at least to date. The private work in industrial has been greater than the decline in Urban Land.

The margins would be enough of an offset in those businesses so that you are flat?

We're not quite flat, because the margins in the industrial has not been quite as good as the Urban Land margins, so although the revenue numbers are offset, the margins are not quite offsetting. We do not do quite as well in the industrial area, although we're doing well this year, but not as well as we would in the Urban Land side, to the tune of maybe, depending on the area, it's in the two to 4% not as favorable on the bottom line.

Okay, thank you.

Marie Millien, RBC Capital.

A quick question on the acquisitions strategy. I was just wondering -- you have been acquiring a lot of employees recently and you have a few more to come in the next -- in this quarter. Is there a limit to how much you can handle in just integrating new employees like that or --?

That is a good question, because I think it is a bit of a two-part question in that part of it depends on the number of employees and part of it depends on the number of companies we actually acquire. So if -- we probably have the ability to do four very fair-sized acquisitions of, say, 1000 employees each without any issue in a year. That would add 4000 employees, but we would be hard pressed to do more than about eight or nine total acquisitions in a year, regardless of size. So if they were only 200 employees each, that would limit the number to, say, 1600. So everything in between is kind of a combination of that.

The issue is that we cannot really include to many small ones, because that's going to impact our ability to do some of the larger ones, there are not enough large ones to only focus on doing three or four very large ones, so it is really a combination of the two and -- at least given our current infrastructure, we could certainly handle integration of 2000 employees in a year. We'll do and have done I think just under 1000 this year in terms of employees, but it is really the number of companies that is also a factor in there.

So could we add 2000 employees? Absolutely, if it was the right types of firms. We could even add 4000 employees if they were four significant firms.

Okay, thank you. That clarifies it very well. In a lot of your businesses in Alberta -- and you said you're expecting still some good organic growth there -- are you able to quantify all the impact of the new royalty regime on your business or is it too early to get a sense of that? Are clients just -- do they know where they are going there?

No, honestly, I cannot give you a classification of what the royalty regime specifically could have an impact, other than if the entire economy in the province is going to be impacted, then obviously, indirectly, we are going to be impacted. But my personal opinion on that is that on its own, the royalty regime is not enough to be material, however combined with some other factors -- if you look at sort of the conventional oil and gas drilling activity and then particularly the gas drilling activity, which has been slowing down, that combined with some other factors is likely to have a bigger impact on the provincial economy than the royalty regime on its own.

I would say that the growth that is happening in the province due to the large infrastructure projects on the oil side, the nonconventional oil and gas, there is a little bit of pullback on the impact of that as an offset by the slowdown in activity in gas in particular and in oil, where I think the number of wells drilled it is back to I think the late '80s levels right now. So I think that is more of an impact than the royalty regime.

Okay, thank you. As far as currency is concerned, does that impact you, apart from the translation, in -- obviously the translation of your revenues from the States, but is there any -- do you feel any other impact on your business of that, of the higher Canadian dollar?

Again, directly not as much, because, in effect, we have a natural hedge since our U.S. work is generally denominated in U.S. dollars because our staff are in the US. There is some cross-border, but it's not significant.

The major impact is on what it does to the economies of the areas in Canada that we work in. And Ontario would be one where -- because of the manufacturing base perhaps has the most impact, but with Western Canada being predominantly a resource space, that's actually a favorable. (technical difficulty) In terms of Eastern, Canada that is not favorable.

Okay, as far is growing in -- you mentioned that you were thinking maybe at one point of going into new types of practices. I read that in one of your communiques and I was wondering, do you have any -- could you give us any sense of where you might be thinking of going or is there any -- anything of interest really?

Well, there's two areas that we have specifically identified and one that we have already made some inroads in. One was the power market, or our practice area. Neill and Gunter is helping us with that and we now have a new practice area as part of the changes that we are making internally. We do have a practice area -- not one of the five, but we have subsets of those, so one of the practice area's in our Industrial group is now power.

Another area that we were looking at is what we would call the high-end geotechnical, geo-environmental area. That is combining expertise in the soils area with our environmental expertise so that we could tackle some of the more significant projects that are likely to come around over the next few years, particularly in managing water resources, things like what happened in New Orleans with the levees and they have to be reconstructed and so forth. And there's other markets like Sacramento that require new levees, like a $10 billion program to do that. There are many dams and other types of facilities throughout the U.S. and Canada that need that. We lack that component on the geo-tech side.

Somewhat complementary to that, as well, is what we would call the hazardous waste side on the soils and Environmental, where, again, there is still, in terms of contaminants cleanup and stuff like that, we do a bit of work in that area now, but we think we can grow that and expand that practice area. So those would be the three areas that we are not as active in right now -- power, geotechnical, geo-environmental, as well as hazardous waste, where we would like to do more. Those would be, for the most part, driven by acquisitions. We want to add staff and expertise in those areas.

Okay, thank you very much.

(OPERATOR INSTRUCTIONS) Richard Stoneman, Dundee Securities.

First question is I noticed that your allowances for bad debt from beginning of the year are up by $6 million year-over-year. It is that one specific item, one specific group of clients, or is it just odds and ends?

Richard, it is not one specific client. I think we sort of touched a little bit on this last conference call. It is a bit of a combination of over the last year we've been making sort of these adjustments. You know, we had the uptick a couple years ago and then we're trying to make a provision for the things that we cannot specifically identify, but because historically this is kind of like a running total, it is a combination of things. There is no one specific item, other than it is a bit of a backward look on the last couple of years and what the experience of bad debt has been and the adjustments that we would likely need to make for it.

So if you look at the comparison from the end of last year, it is clearly up. The number is higher, but just the way it sort of comes up as an aggregated number, I think the way to look at that is that I think right now we're roughly a little over six, 6.5% of our net fleet is the allowance. I think we were at 4% or -- Don, do you know?

Richard, at the end of the quarter, our allowance on our outstanding receivables was 6.4% of our gross receivables, which is higher than the amount as at the end of December, but if you go back to Q3 of last year, it was 6.3%. So it is very consistent with where we were last year.

I think also you mentioned the $6 million amount. That is the additional amount that we have expensed as our bad debt allowance for 2007 for the first three quarters. But quarter-over-quarter, if you compare Q3 of '07 to Q3 of '06, the dollar amounts are very similar. So it is an aggregate amount for the year, but the quarterly amount is pretty similar.

Thank you. Second question, the number of employees at the end of the quarter, could you share that with us?

We are about 7700.

Okay, thank you. Finally, on a more general basis --

Sorry, we are 7700 now. I think that includes the Neill and Gunter, so at the end of the quarter, we may have been -- if you're talking about the end of the quarter of September 30, because we did not close Neill and Gunter until after the end of the quarter. So we aren't about 7700 right now. We would have been at about 7000 of the end of the quarter.

Thank you. A more general question, the public markets tend to be paying a lot for construction-related activity now, with some construction related companies selling at 30 times forward earnings. Historically, those companies sold at a steep discount to engineering service companies, professional service companies. In the private markets that you are involved in, has there been a juxtaposition of those two groups where construction is now considered more valuable than professional services, or is that just an anomaly in the public markets?

I think it is an anomaly, but I do not have all the statistics to kind of back that up. In the private markets, again, people always tend to look at the public as comparables, just like they do with us, and so there has been a corresponding increase as well, but the reality is that, at least what we are seeing and certainly in the construction, that tends to apply to the larger firms only, that if you look at the smaller firms in construction and the private markets, they are still closer to the more historical multiples. But there seems to be a premium placed on size in the construction sector in the public markets.

Thank you very much.

Paul Lechem, CIBC World Markets.

Tony, these quarters in a row now that the transportation business has been down organically, and you mentioned that it has been due to timing of a winding down some projects and the startup of others. Can you give us some more metrics around that? How many contracts are we talking about and how concentrated is that business around these large contracts?

Generally, we are talking about maybe three or four contracts. We are not talking about dozens. If you look at some specifics, if you look at we had some delays, like, I would say the three purchases that came on end in big size was the North LRT work in Phoenix, which the South, you know, the Hanson Hyundai job in Edmonton, which is the ring road of P3, those tended to be delayed. Then we had a job that I think we have talked about we're going to start -- we talked about the border crossing in Nogales between Mexico and Arizona. That was delayed. It actually is just in the process of being started to now. We kind of thought that that was going to start at least a quarter ago.

So we are really only talking about a handful of jobs overall and they tend to be those jobs that tend to have fees that would be in the most part over $5 million each for us, like some of them could be more, like, if you get one of the Petrie jobs, it would be over $10 million in fees. So they tend to be larger than our normal jobs, because we do thousands of jobs every year and they tend to be small. But we do have and we do want to work on some of the larger jobs. It is harder to match the starting and end dates on the larger jobs. So we kind of get caught in that every once awhile, but once when the jobs are going, then we're doing quite well.

You mentioned that you believe Q4/Q1 they are going to start to ramp up. How much visibility do you have into that or could there be further delays in these contracts?

Like I said, as far as I know, now we started that border crossing job and so we are starting to see the jobs start, so since we are only talking, for the most part, three or four jobs, there is at least one of those three that has started there will be, at least in my expectation from the feedback I am getting from our guys, is that they expect these to start in the Q4 or, at the latest, Q1 of '08.

Are there any other practice areas or any other large jobs that could be similarly at risk in the near future?

Well, the only other area where there are some like that is in the Buildings side, where we get some large hospital jobs or university buildings and right now that is not happening, but if it were -- if there was an area where that could happen, that would be it.

Okay. Your revenues in Canada were up year-over-year, but down sequentially. I was just wondering what might cause your Canadian revenues to dip down from the Q2 levels.

Well, you mean the Canadian revenues -- really it's sometimes you have a really good quarter and I think that the second quarter was quite good and I do not see that as a trend necessarily. I think it is just a matter of sometimes, again, you know, you do a little bit work, there may be a little bit more site services during construction that we're doing because of the phase that the project is in.

So it is a little bit of timing as well, because during the construction phase of a project -- although we do not do construction, we do provide services, whether they are survey services or construction observations services or scheduling cost control, things like that. So depending on which phase of the project we're working on, we would have fluctuations in our fee revenue and I think they are pretty modest, but there is really no fundamental reason for that.

Okay, my last question is in the write up in the MD&A it talks about how you are realizing integrations synergies on the administrative and marketing expenses from your various acquisitions. I was just wondering how much more is there that you think you could get out of that? With Neill and Gunter, are you going to have to go through the same exercise as well again there?

We do. Again, each company tends to be a little bit differently, but from our perspective, we think that -- if you are asking for the potentials -- I think our SG&A costs -- we have at least one point, 1.5 points in there that if we get some of the noise, if you will, that happens during the acquisitions out of the there -- and no two acquisitions are the same, but it is not always have that impact. Some are a little bit easier to do. There is really about one point or 1.5 points in our SG&A costs that are being impacted right now by some of the stuff that we're doing.

Okay. Thank you very much.

There are no further questions in the queue.

Okay. Well, if there's no more questions, we would like to thank all of you for joining us and we appreciate it and we look forward to speaking with you again at year-end results. So thanks, everyone, for attending. Don and I will now sign off.

Thank you and, ladies and gentlemen, this concludes the Stantec Inc. 2007 third-quarter earnings release conference call. Thank you from Telus.