GDI Integrated Facility Services Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 9, 2023

There are 7 speakers on the call.

Operator

Ladies and gentlemen, and welcome to the GDi Integrated Facility Services Inc. 2nd Quarter 2023 Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Wednesday, August 9, 2023.

Operator

I would now like to turn the conference over to Stephane Lavin. Please go ahead.

Speaker 1

Thank you, Frederic, Bon Martin and Tuus. Good morning, all, and welcome to GDi's conference call to discuss our results for the Q2 of fiscal 2023. My name is Stephane Hsing. I'm Senior Vice President and Chief Financial Officer of JDI. I'm with Claude Bigelow, President and CEO of JDI and David Lin Chi, Executive VP of Corporate Development.

Speaker 1

Before we begin, I would like to make you aware that this call contains forward looking information and West listeners to refer to the full description of the forward looking Safe Harbor provision that is fully described at the beginning in the MD and A file on Sellar at the end of last night. I will begin the call with an overview of GDI Financial results for the 2nd And then I will invite Claude to provide his comments on the business. In the Q2, Jira recorded revenue of CAD609,000,000, An increase of CAD83 1,000,000 or 16 percent over Q2 of last year, which is mainly due to organic growth of 12%. We recorded an adjusted EBITDA of $34,000,000 in the quarter, a decrease of $4,000,000 or 11% over Q2 of last year. On a year to date basis, revenue increased by $179,000,000 or 18 percent to reach $1,200,000,000 compared to $1,000,000,000 last year.

Speaker 1

Organic growth was 13% year over year and revenue growth from acquisition was 2%. Adjusted EBITDA in the first As amounted to CAD67 1,000,000, a decrease of CAD7 1,000,000 or 9% over the corresponding period of 2022. Now moving to our business segments. Our Business Service Canada segment recorded revenue of $144,000,000 in Q2, a decrease of $1,000,000 or 1% compared to the Q2 of 2022. This segment reported adjusted EBITDA of $13,000,000 compared to $19,000,000 in the Q2 of 2022, representing a decrease of $6,000,000 Our Business Services The U.

Speaker 1

S. Segment recorded revenue of $180,000,000 in Q2, representing an increase of $16,000,000 when compared to Q2 of 2022, mainly attributable to the Canadian acquisition in August 2022 and the appreciation of the U. S. Dollar relative to the Canadian dollar. The segment reported adjusted EBITDA of $13,000,000 in both second quarters of 2023 2022.

Speaker 1

Both Business Services segments experienced flat to slight negative organic revenue growth that is attributable to a lower amount of COVID-nineteen related extra services as compared to Q2 of 2022, which also led to lower adjusted EBITDA margin. Now our Technical Service segment Recorded revenue of $264,000,000 or growth of 33% over Q2 of last year with 31% organic growth revenue. The segment generated an adjusted EBITDA of $12,000,000 representing an adjusted EBITDA margin of 5%. Revenue growth in the business It's attributable to a strong increase in project revenue and higher service revenue compared to the previous year. Finally, Our Corporate and Other segment reported revenue of $21,000,000 and a negative adjusted EBITDA of $4,000,000 compared to revenue of $18,000,000 and Negative adjusted EBITDA of $2,000,000 in Q2 of 2022.

Speaker 1

The Corporate and Other segment is composed of GDI IFF, GDi Geventeral Product Manufacturing and Distribution Business as well as GDi Corporate Cost and Elimination of Intercompany Transaction. I would like to turn the call now to Claude, as we'll provide further comments on GDi performance during the call.

Speaker 2

Well, thank you, Stefan. Bonjouracos. Good morning, And thank you all for taking the time to participate in our earnings call this morning. I'm pleased to report that GDI delivered another decent quarter, Like Stefano stated, with €609,000,000 in revenue or 16% growth over Q2 last year, including a double digit organic 12%. As expected, our business, Service Canada segment continued to experience a reduction in EBITDA margin as we have been adjusting to the new post COVID operating environments, especially in the Class A office market as we expected.

Speaker 2

I'm happy to say, however, that we feel we are approaching the end of the decline and expect the margin to begin to stabilize in the second half of 2022. Our Business Service USA business has a good quarter, generating EBITDA that was in line with the prior year. We're also seeing an increase in bidding activities in both of our business service business, and I'm optimistic regarding organic growth in the coming Our technical service business is continuing to perform well. Ensworth delivered Organic growth of 31% in the quarter has executed on its record backlog, while also generating higher levels of service revenue. And the EBITDA margin was 5% in what was usually the business' 2nd weakest quarter.

Speaker 2

Again, this quarter, the business was able to book as much as it built, and the backlog remains near record level. I remain very positive on the outlook for ANSWERFT going forward. Our manufacturing and distribution business Continued to progressively recover from its COVID-nineteen lows, and we have been seeing a gradual improvement in results almost monthly during 2020 Additionally, our Integrated Facilities Service business is executing on its 2 inaugural contracts as it has been building a pipeline of potential opportunity across North America. Overall, I'm very happy with how GDI performed in this quarter. We delivered strong revenue growth.

Speaker 2

Our margin is stabilizing in the business service segment, and the outlook for LT Levels of organic growth is positive across all our business segments. One area where we have identified for improvements going forward Our working capital management and some improvements in our SG and A cost structure. Our technical service business growth has for sure generated a higher demand and working capital requirements. So as a result, Enzor's strong organic growth during 2023, we have made significant investment in working capital to support this growth. We are actively working to identify and implement short term and long term strategies to reduce working capital requirements across all our business lines, and we expect to see progress being made during the second half of this year.

Speaker 2

Our balance sheets remain strong. Our leverage is within our comfort zone, and we have a healthy pipeline of strategic growth opportunity that we are actively working on. I'm looking forward to seeing our business perform in the second half of this year. So thank you again for your time today. And operator, you can please open the line for questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a 3 tone prompt acknowledging your request and your questions will be pulled in the order they are received. Your first question comes from Derek Lessard with TD Cowen. Please go ahead.

Speaker 3

Yes. Good morning, everybody. Hope you're having a great summer.

Speaker 2

Thank you. You too.

Speaker 3

Yes. Thank you. And in the press release and in your prepared Remarks, Claude, you did mention that you expect adjusted EBITDA margins to stabilize in the second half. Just curious if, one, if you're referring to both business service segments or just Canada. The EBITDA margin came in at 9%.

Speaker 3

And if I interpret this right, you're expecting It could come in around 8% by the end of 2023, and that's still above the 6% to 7% pre pandemic level. So could you just maybe Help us bridge the gap there and what would be a reasonable long term expectation for those margins?

Speaker 2

Well, Derek, I think you are Stating it correctly, you know what, I cannot be extremely precise, my apologies, On exactly the numbers, but we are this is the path. We are stabilizing on the revenue side with JDi Canada. JDi U. S. Has been stabilized for a while now because the business Has been going back to a normality a little bit faster than Canada.

Speaker 2

But in Canada, we're still There is volatility. We are still dealing with office in occupancy, reductions in prices and the diminution Of all the extra work, a significant diminution of the extra work. But what we have seen in the last probably month, month and a half is Now there is a certain stability, so we have a more a little bit more visibility on the revenue. And I was saying before, I do feel like going forward, we're going to have an increased EBITDA margin because of many factors. But yes, I think the BB and D, 8 is 9 ish.

Speaker 2

This is what we are expecting towards the end of the year.

Speaker 3

Okay. I guess I'm curious on What's driving sort of that bump in the margin profile in Canada?

Speaker 2

Well, listen, you know what, I don't like to talk about the recipe openly all the time, but let me put it this way is for sure with the reduced occupancy, We are able to optimize a little bit our efficiency and it helps. And we are still having certain Amount of extra work generated by the post COVID pandemic tail. So it makes it overall, the mix together enables us to be a little better than traditional.

Speaker 3

Okay. Thank you. That's helpful. There's one other question I have for RBQ is you also noted an active pipeline of Could you maybe add some color to that, what type of markets, what type of properties those are? Well,

Speaker 2

actually, you know what we are okay, let me respond politically on this one. We have an yes, we are pursuing business services both in Canada and the U. S, But I would say that we have a I'd say we have a bigger focus in the U. S. Actually.

Speaker 2

And we have completed Some technical acquisitions during the year, we're still working actively on this front. I just can tell you that David, Lin Chi and the teams are not at home in vacation. They're working hard on a few things.

Speaker 3

Okay. Thanks for that, Claude.

Speaker 2

Okay. Sorry, I cannot tell you more.

Operator

Your next question comes from Jonathan Goldman with Scotiabank. Please go ahead.

Speaker 3

Hi, good morning and thanks for taking my questions. I wanted to ask about the technical services margins. You mentioned that Q2, the 2nd weakest quarter seasonally, Margins were close to flat quarter on quarter. How should we think about the cadence of margins for the balance of the year and going into 2024?

Speaker 2

You see, the way that like I was saying before is, we don't have a great Seasonality in our revenue, but we still have a little bit of it. So example, in the technical service, The service, the break fix and open the maintenance, opening up air conditioning, Setting up system for air conditioning. In the 1st quarters, we have holidays, we have less Working days in the Q2, we really start making working heavily with service calls and everything Towards the half of the second quarter and it goes along all the 3rd quarter and 4th. So when we say weakest quarter is The business mix is different. We do a lot more projects than maintenance and break fix valves.

Speaker 2

But as the second quarter comes in and the third quarter, These margins are really picking up and providing us with a better overall return. And also in the summer, it is this is the time where we execute a lot The installs and it certainly is healthy for the margin as well. And 2024, I think I think it's going to repeat itself. Allow me to just add up a little bit on this. With the backlog that we have and the way that we're building it And that we are positioning it is our visibility is 2024 with the it's looking to be a very good business Here also for Ensworth.

Speaker 2

And like I said, our challenge is to cope with the increased revenues. We have to work on the margin. We need to be better on our working Yes. We need to change a little bit our approach in the financials as the interest rate has grown significantly. So this is where we have to work.

Speaker 2

But on the revenue side and profitability, I don't think we have a big issue at this time.

Speaker 3

Okay. So just a follow-up there on the margin. What's your confidence level that you can get back to 2019 margins or even exceed That 6% high watermark. And also what would it take to get there or above that?

Speaker 2

Maybe we misunderstood each other. What I'm telling you is the technical business, by the end of the year, will be within Margin, as the next two quarters, the next two quarters are usually very profitable on the business. So it's not like what are we going to do to get back to the margin. I think we are right working towards that with the next two quarters. Now the I think on the business service side that we actually will perform going forward, we'll perform slightly better Then our 6% margin.

Speaker 2

So we're not into a recuperating mode. The business is right into it.

Speaker 3

Yes. That makes sense. Thank you for clarifying that. No, thanks. 1 on capital allocation, I guess, Just given where the stock is trading and also what you're seeing on the deal flow side of things, how do you assess the relative effectiveness of M and A versus buybacks?

Speaker 3

Well,

Speaker 2

we still believe that Smartly acquiring businesses, integrating them and optimizing them is the most the best value creation. There is still we're not in a position where we don't see opportunities. We are still working on our $3,000,000,000 by 2025. We are very well into it as you see. I don't see the need to I don't see the need To actually invest heavily on using capital to buy back shares, I think the opportunity is still into growth going forward.

Speaker 3

That will make sense and it

Operator

Your next question comes from Jon Zamparo with CIBC. Please go ahead.

Speaker 4

Thank you. Good morning.

Speaker 3

Good morning, Seth. Good morning.

Speaker 4

I wanted to start on the working capital Dynamics and you identified some efforts you're taking to improve this. I wonder if you can give some detail on what exactly these efforts are? What's the kind of timeline you Okay.

Speaker 2

Can you just repeat, please? Because the first part, you know what, I did not hear you at all.

Speaker 4

Sure. The press release and also your prepared remarks, you referenced some improvements you're trying to make in working capital and reducing that level. So I wonder if you can talk about some of the details of what exactly these efforts are and what kind of time line you expect to have these remediations in place.

Speaker 2

Okay. No, thank you very much for repeating. Okay. Working cap strategy, you know what, we are working 3, 4 fronts at the same time. So let's go 1 by 1 very quickly.

Speaker 2

First front is when the interest rates were 1%, 1.25%, 1.5%, We had a tactic to ensure the best service by being a fast payer. And now with the new environment, now we're getting a bit more savvy on the way we treat our money outflow on that front. Secondly, on the revenue side, especially in the technical group is we are redefining our strategy, meaning that Requiring deposits from our customers on projects where there is heavy equipment to acquire, What improving on our order to cash segment? What implementing more and stringent AR collections Effort. So as you see, it's many pieces like this that will improve overall.

Speaker 2

So if we reduce our DSO by 4 days, we increase our cash inflows through deposits. And example, Improving our RIIP because for me, my order to cash, there is a portion in work in progress that is shows in the revenue, but is not Bill directed to Mr. Customer, so now we're working extensively to reduce that cap. So this should improve Significantly, our working GAAP requirement in the technical segment and on the business service segment is we are reorganizing our subcontractor base Into more advantageous terms of payments.

Speaker 4

Okay. That's great color. Thank you for that. And just to follow-up on that, is more of the source of the increase in receivables, is it fair to say it's coming from technical services rather than Rather than your other two segments?

Speaker 2

Well, yes, you're not far from the truth. They both have experienced a little bit of lag. Interest rate is growing and we see it in our receivables. People are a little bit more savvy by paying. But yes, For sure, the technical business is a big user of our working capital lately.

Speaker 2

And in receivables, because we're working with Commercial real estate, we're contractors working within the space. We need to be a little bit more annoying, let's put it this way.

Speaker 4

Okay, fair enough. Just one more on the receivables. I didn't see an aging schedule in any of your filings. Can you say approximately what percent of the $550,000,000 or so in the receivables would be considered overdue on your terms?

Speaker 2

Well, listen, you know what? I think that Traditionally, no, not today. Lately, I think we're saying about, hopefully, I won't get in trouble with my If I make a number, but I would say probably between 12% 16% is usually our going rate on over June. And not over June, but Over 90 days plus.

Speaker 4

Okay. And no meaningful change to that versus historical levels?

Speaker 2

Well, you know what, I'm used to take about 12% or 10% to 12%, so it's a little bit There, but the big gap is not so much on those over overdue because we are very we are added, you know what I'm saying continuously. It's the 45 to 55 to 65 to 75 that are moving upward. You know my point? So and there is a lot of money there. So the slide is not from 40 to 120, but the slide is from 45 to 60 or 65.

Speaker 2

And this is what I'm saying that I want to improve by 4 days.

Speaker 4

Got it. Okay. That's good color. Just two more subjects. The first is on labor, and we've seen an increase in labor disruptions and labor disputes and strikes across different service industries.

Speaker 4

Has there been any change in your relationships with labor?

Speaker 1

I was wondering how you

Speaker 4

characterize the relationship at the moment.

Speaker 2

Well, we have great union relationship. We love them all, and we're all happy together. No, okay. Okay. I'm sorry.

Speaker 2

I was dreaming for a moment. So you know what, traditionally, we are a business That is quite stable on that front. We rarely experience significant labor shortage. I don't expect any major, major issues going forward. We're going to have a large Union agreement negotiation next year, but we're working with unions that are sensible to the economics.

Speaker 2

For sure, the inflation has provided a point of pressure in our negotiations, but We went through most of our business service in Canada on the larger ones, and we were able to reach agreements and have worked with our customers Into that. So I don't expect major, major issues, but we will I hope that 2024 and 2025 will have Certain stability on inflation and interest rates and I think it will help better.

Speaker 4

Yes, understood. Okay. Just one final one. In your prepared remarks, Claude, you referenced that you're looking to cut some costs out of the business. What segment does that relate to?

Speaker 4

And you quantify what level of cost you'd like to reduce?

Speaker 2

Okay. Well, listen, Again, I don't know if I can put a number, but if I were to think to reduce by 5% over the next 3 quarters, it would be not out of the gate. And we are doing it on every segment. Each segment, we can find better efficiencies. I will say something maybe not nice, but CAVIB was very, very destabilizing overall.

Speaker 2

And I'm sure that you have that in many business. So now what I'm doing is and what we're doing because I'm not alone in that, the management's working as a team on that is we are Training up our approach, we are refocusing on the business necessities. We're tightening up the ship. This is what I'm saying By cutting costs is, you know what, we're trying to remove whatever is not supposed to be there. And we are we changed from Managing volatility to efficiency management.

Speaker 2

So this is the shift. I would say that like this is, I'm not moving to crisis mode. What I'm saying is we have to be extremely prudent and we're acting accordingly. Does it make sense to you?

Speaker 4

Yes, that's very clear. All right. I appreciate all the insights. I'll leave it there. Thank you very much.

Speaker 2

Thank you very much.

Operator

Your next question comes from Zachary Evershed with National Bank Financial. Please go ahead.

Speaker 5

Good morning.

Speaker 2

Good morning, Mr. Zachary.

Speaker 6

And so I'm curious if there are Further levers that you like to

Speaker 5

pull for margin expansion in Technical Services, once you've looked through the working capital and that's Optimized, what's the next step for that business segment?

Speaker 2

The next step is To, I would say, improve our customer projects and margins. So we have a very extensive backlogs. Probably in some regions, it gives us a little bit of flexibility on improving our gross margins. And for sure, this will affect the bottom line. So this would be one strategy to be a little bit more aggressive on our project pricing.

Speaker 2

This is one thing. Secondly, the same thing I said for our overhead. For sure, the technical service require far more Support than expected, but by growing, I think we can find a little bit more efficiency. And at the end of the day, Stefan and the financial teams are working actively into our new systems, Our future in Technology and Systems, and we also think that this will provide more visibility, More flexibility and also overall financial efficiency in our overhead spend.

Speaker 5

Good color. Thank you. And I did miss the beginning of the prepared remarks, so apologies if you've covered this already. But Did you provide any color on the ERP unification project?

Speaker 2

The European Unification project?

Speaker 5

The ERP.

Speaker 2

Okay. I'm sorry. I was saying I said I did not know we were in Europe. Okay. Okay, I'm sorry.

Speaker 2

Okay. The ERP. Well, actually, ERP is, As you know, we are completing the integration of our HRIS systems. So now we have most of Canada on and most of all the U. S.

Speaker 2

Is on board, and we're completing the transition. And by the end of the year, We should have completed the integration of the whole company beginning of 2024. We should be done and integrated. So this is our main focus right now. There is a little team preparing and working around the products and the systems and Building up what the skeleton of it, but this project will really see the light of day starting early 2024 going on.

Speaker 2

But it's still in the it is in the project. We have the team to do it. We have the means to do it. But now the focus So really complete our HRIS transition.

Speaker 5

Got you. Thanks. And just one last quick one. In the M and A pipeline, do you think you have a greater focus on scope, scale or geographic expansion?

Speaker 2

Scope And not scale, but scope and geography. Again, I don't want to jinx anything, but I do believe that we saw a lot of activities in the COVID time on acquisition and everything. We do believe that within the next couple of years, there will be opportunities that will present themselves. Now the interest rate is going up. And we have not seen the end of it, I mean, as far as the effect on businesses.

Speaker 2

So now what we are doing is we stay focused on our usual past prudent approach. And I just want to make sure that we're ready When opportunity shows up probably in the next 4, 5, 6 quarters, we do believe that will be opportunities.

Speaker 5

Great. Thanks. I'll turn it over.

Speaker 2

Thank you, sir.

Operator

Your next question comes from Frederic Trevy with Desjardins. Please go ahead.

Speaker 3

Good morning, Michel. Good morning. Good morning, Claude. On the positive organic growth outlook in Business Services, You highlighted that you also highlighted in the call that office was kind of stabilizing over the past month, 1.5 months. So Should we understand by that, that the organic growth outlook is stronger in other end markets such as industrial or Maybe education or health care, can you just maybe comment on sort of the organic growth outlook by end market, if there is anything that stands out?

Speaker 2

Well, we are defining that's a very interesting thing because we're working and redefining our target sector because commercial real estate, I don't think it's a news for everyone. It would be a little bit under the weather for a while. So yes, for sure, we're focusing a lot on Industrial, a little bit in Healthcare. Education, Frederic, and again, I don't want to make a Statements here, but I will do a little bit. It's very interesting.

Speaker 2

There's a lot of revenue to pick up. Bottom line is not always a de rendezvous. So I'm a little bit cold feet on education, but we have to what we have done best so far is pick and choose properly and This is the key. Good business mix, a good geography, focus on margin, try to not take negative projects. It has been a recipe that has worked so far and I intend to keep it like this.

Speaker 2

We're not for the show. I'd love to show 8% 10 percent organic growth top line, but this is not my main focus. We have to grow organically, yes, and we have to grow with the right project. But so far, you know what, we see beginning of the year was a little bit, I would say, shaggy. But as the year goes, I'm encouraged with our bid structure and everything.

Speaker 2

So You know what, I don't see it as an out of this world growth, but I see that there is good potential.

Speaker 3

Great. That's very helpful. Thank you. Maybe switching to Technical Services, when speaking about Margin leverage, you mentioned pricing for projects. Anything to do on the on call services?

Speaker 3

Are those maybe higher margin than projects? And perhaps you could try to shift the mix, if that's possible at all, either organically or through future M and A?

Speaker 2

My friend, what do you think we're doing? Absolutely. You know what, recession times, dangerous times, You want to make sure that you're the break fixer of everyone. So what we have is we shift the Vice President And the team is 100% focused on developing and what promoting and growing our break fix and service cost and maintenance business because we do believe that if tough time comes, again, I'm not saying that it will come, but I don't have a better segment, sorry, We are focusing actively to bring back our business to what I should not say it, but to a fifty-fifty Probably mix between projects and service business. There is an old saying If service cost pays for the whole overhead, we can go through any storm.

Speaker 3

Great. And last question for me on maybe on Energir and your energy efficiency solutions. Can you maybe provide an update on Sort of the demand environment and backlog maybe there, just general comments. And just an update as well on your, I guess, ambitions to grow your energy efficiency solutions outside of Quebec?

Speaker 2

Okay. Inezir, We acquired this business February last year. There was a lot let me put it this way, we're very glad to be doing. There was a lot of legacy projects we had to complete, which were not fantastic. So we suffered a little bit on that front.

Speaker 2

Secondly, over the last 3, 4 months, we have turned the corner into profitability where they're supposed to be. And thirdly, We have significant wins in these divisions. So it's very, very encouraging going forward Doug, the business is going to deliver on the promise. This is one bucket. 2nd bucket, We are very involved in pursuing our development in energy efficiency and technology.

Speaker 2

Our heads of the Technology division has now moved to Montreal, and he will oversee this segment as a global segment. Thirdly is we have issued a press release lately regarding an alliance with Energy Engineering Firm in Ontario, and this will enable us to Participate in partnership with them into microgrid development projects. So yes, it is a very, very big focus in the business. And we want to be we want to make sure that we will be the go to guy for the carbonations and energy management projects. But now it's a built up.

Speaker 2

It's a work in progress. I think that within the next year and a half, We should have a structure that we'll be able to service every segment of the business.

Speaker 3

Sounds great. That's it, Chris.

Operator

Your next question comes from Jeff Fenwick with Cormark Securities.

Speaker 6

I think most of my questions have been answered Claude. I appreciate The color. I wanted to circle back to the M and A discussion, and you mentioned that there may be some opportunities on the horizon out there.

Speaker 3

Could you put

Speaker 6

that In the context of your balance sheet position, when I look at your debt level today, debt to EBITDA is around 3x, I would imagine, On a go forward basis, how comfortable are you with the leverage level there? And would you still feel comfortable Taking on a bit more debt if you find the right acquisition.

Speaker 2

Yes. Well, as I was saying is I'm prepping what we're prepping for this opportunity. So it means that for sure this is why We are investing a lot into improving our working capital, takes a significant part of that, paying the debt. So we want to get the money in. So that's one thing we're doing in order to be better prepared.

Speaker 2

This being said, we have room

Operator

Hello? I'm sorry, one moment. Please assist the operator.

Speaker 2

Hello, hello.

Speaker 6

Hi there. Can you hear me? I'm still offline.

Speaker 2

My apologies. Technical difficulties with the provider, so I don't know what happens. Okay. So where was now yes, working capital. So yes, we are in our offensive zones.

Speaker 2

We have maneuvering we have a margin of maneuvering. If we find the right opportunity, for sure, What we are comfortable to take a little bit more room into it, but the general idea is to be the best prepared In the next 4th to 6th quarters to be with maximum capabilities. But we have great relationship with our bankers. I don't think there is any discomfort at this time. So we'll do it one thing at a time.

Speaker 2

But yes, You know what, we need to I want us to improve our debt level, so we are able to gain when we have the opportunity. So growing EBITDA and reducing the debt for that.

Speaker 6

And then from the working capital, I think the build this year has been about $65,000,000 So you think there's an opportunity To recover a meaningful amount of that back into cash through the back half of the year? Or is it more gradual than that mean?

Speaker 2

I think it will be gradual. I think it will go over 3, 4 quarters. The gang is working very hard to provide me There are specific day to day planning, but if I were to say a number, probably we could recuperate half of that. You know what, they're taking out timing issues, you know what I'm saying. But I think that Stefan and the teams are working to recuperate probably, I would Yes.

Speaker 2

But again, it's a guesstimate. I don't want to you just to go with it and make it a statement.

Speaker 6

Okay. That's very helpful color. Thank you. I'll leave it there.

Operator

Thank you. Your next question comes from Derek Lessard with Kibbe Kallen, please go ahead.

Speaker 3

Yes. Thanks, Claude. I appreciate the follow-up. I just wanted to hit on another one Technical Services. Curious as to what's preventing you from converting more of the backlog into revenue?

Speaker 2

People to start with, there is a limitation on the usage. We are working now, I would say to the I90s on our labor utilization. So it goes with technical. So we are close to our capacity. Secondly is also in projects, we have to go with the flow of the new contractors.

Speaker 2

So we cannot install more than we are provided for as a space to work. And I would say that I would privilege higher margins than growing, making more revenue. I do that we try to work on both. The good news is since we have a very good reputation, we have been able to attract Quality technicians who work within the group, so that's a good news. So we have a good pace of work.

Speaker 2

And example just to give you an example, we have acquired and we are installing laser cutting equipments on our Piping division in order to be able to execute more and improve margins. So I'm working more on the efficiency than absolutely beating the top line all

Operator

There are no further questions at this time. Please proceed.

Speaker 2

Well, thank you very much for your questions and for taking the time to listen to this call. I would just say in closing that we're focusing on what I call my 4 the 4 to dos that we have Improve working cap, increase the margin, work on the debt. And these are points that we're working and continue on to our prudent acquisition So these, for me, are very important. The second thing I would like to share with you is We just have lived a tremendous time. We have lived very, very special times With a lot of volatility, a lot of new changes, and we have to adapt to that, I think the good news is that we are in the tail of it.

Speaker 2

So I think we're starting to have more visibility. So I hope in the next quarters, we'll be back to our Stable results and stable growth that we have been doing for the last 10 years, but with an improved margin. So it's not all bad, but We're still coping with all the changes that we have to go through. We look fair. So thank you again, and I look forward to the next call with you.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in NASDAQ. You please disconnect.

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Earnings Conference Call
GDI Integrated Facility Services Q2 2023
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