TSE:GDI GDI Integrated Facility Services Q3 2024 Earnings Report C$31.20 +0.20 (+0.65%) As of 12:58 PM Eastern Earnings HistoryForecast GDI Integrated Facility Services EPS ResultsActual EPSC$0.28Consensus EPS C$0.26Beat/MissBeat by +C$0.02One Year Ago EPSN/AGDI Integrated Facility Services Revenue ResultsActual RevenueN/AExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AGDI Integrated Facility Services Announcement DetailsQuarterQ3 2024Date11/12/2024TimeAfter Market ClosesConference Call DateWednesday, November 13, 2024Conference Call Time9:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress ReleaseEarnings HistoryCompany ProfilePowered by GDI Integrated Facility Services Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 13, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to the GDI Integrated Facility Services Inc. 3rd Quarter 2024 Results Conference Call. At this time, all lines are in listen only mode. Following the presentation, there will be we will conduct a question and answer session. This call is being recorded on Wednesday, November 13, 2024. Operator00:00:28I would now like to turn the conference over to Mr. Charles Etienne Gerois, Senior Vice President and Head of Finance. Please go ahead. Speaker 100:00:38Thank you, operator. Good morning, all, and welcome to GDI's conference call to discuss our results for the Q3 of fiscal 2024. My name is Charles Desjardins. I am Senior Vice President of Finance, Operations and Digital Transformation of GDI. I am with Claude Guigga, President and CEO of GDI and David Inchy, Executive Vice President of Corporate Development. Speaker 100:01:05Before we begin, I would like to make you aware that this call contains forward looking information and we ask listeners to refer to the full description of the forward looking Safe Harbor provision that is fully described at the beginning of the MD and A filed on SEDAR last night. I will begin the call with an overview of GDi financial results for the Q3 of fiscal 2024 and will then invite Claude to provide his comments on the business. In the Q3, GDi recorded revenue of $640,000,000 an increase of $25,000,000 or 4 percent over Q3 of last year, comprised of 5% growth from acquisition, 1% growth from the appreciation of the U. S. Dollar relative to the Canadian dollar, partially offset by a 2% organic decline. Speaker 100:01:57We recorded adjusted EBITDA of $39,000,000 in the quarter, in line with Q3 of last year and up $5,000,000 compared to Q2 2024. On a year to date basis, revenue increased by $108,000,000 or 6%, all coming from acquisition to reach $1,900,000,000 compared to $1,800,000,000 last year. Adjusted EBITDA year to date amounted to $100,000,000 a decrease of $6,000,000 or 6 percent over the corresponding period of 2023, mainly due to the cost overruns incurred in the 3 projects in our U. S. Technical service business at the beginning of the year and higher adjusted EBITDA in our Business Service Canada segment in 2023 due to efficiencies coming from COVID related lower office occupancy rates. Speaker 100:02:49Moving to our business segment. Business Service Canada recorded revenue of $145,000,000 in the 3rd quarter, while generated $12,000,000 of adjusted EBITDA for an adjusted EBITDA margin of 8%, which was in line with Q2 2024 and was about 2% lower than Q3 last year. Our Business Service USA segment recorded revenue of $222,000,000 in Q3, representing an increase of 37 compared to Q3, mainly to the Italian and Paramount acquisition and 1% organic decline despite the loss of a major customer in Q1 2024. This segment reported adjusted EBITDA of $14,000,000 in line with Q222 and Q3 last year. Our technical service segment recorded revenue of $264,000,000 compared to $269,000,000 in Q3 last year. Speaker 100:03:46The organic decline is explained by a decrease in lower margin project revenues versus this quarter versus the same quarter of last year. This segment generated an adjusted EBITDA of $20,000,000 representing an adjusted EBITDA margin of 8%, which is $4,000,000 higher than Q3 last year. The 3rd quarter is typically the technical service segment's seasonally strongest quarter. Finally, our corporate and other segment reported revenue of $9,000,000 compared to $15,000,000 last year, mainly due to the sale of our superior distribution and retail business at the beginning of Q2, which was partially offset by the growth generated by our U. S. Speaker 100:04:25Chemical manufacturing business. I would like to turn the call to Claude, who will provide further comments on GDI performance during the quarter. Speaker 200:04:34Well, thank you, Charles Etienne, and thanks to all of you who are participating in GDI's 3rd quarter's conference call. I'd like to start by publicly welcoming Charles Etienne as lead of the finance teams, GDI's finance team. He officially took over from Stephane Laveing on October 1, and is now in charge of finance for GDI. Stephane is still with GDI in a consulting capacity to support Charles Etienne in his transition, and he's among us this morning. Thank you, Stephane. Speaker 200:05:06I'm quite pleased with GDI's results in the Q3. Our Canadian business segments delivered an adjusted EBITDA margin of 8%, which was in line with both Q1 and Q2 of this year. Our Canadian business is seeing a relatively stable level of occupancy in the Class A markets, which is evidenced by a very strong a very consistent margin profile for the business in 2024. Organic growth in the business was down slightly in Q3. However, this is the result of timing differences between contract wins and losses, and we had the numbers of new contract wins that will start up in Q4 and Q1 of next year. Speaker 200:05:50That should help to support our organic growth numbers and targets. Our U. S. Business service segment delivered slightly negative organic growth as well, which was driven by the repositioning of the business largest clients, the bulk of which incurred at the end of Q1 this year. We still be experiencing headwinds in quarters over quarter organic growth comparisons from this event for the next two quarters. Speaker 200:06:15But however, I'm very encouraged that our teams was able to replace almost all the revenue with new business wins in a relatively short period of time. Also during the quarter, we continued to work on margin improvements initiatives at our Italian acquisitions. While it's taking a bit longer than we initially planned, we expect to complete the process by Q1 of next year. When comparing Q3 of 2024 to the Q3 of last year, our U. S. Speaker 200:06:47And Canada Business Service segment were burdened with an additional $3,000,000 of costs on a combined basis because there was an extra work day in this year's quarter. I'm very encouraged that both businesses were able to deliver strong results when compared to the prior year's quarter despite this hurdle. Our technical service segment delivered a very strong quarter with an adjusted EBITDA margin of 8%, the highest recorded in the business since the acquisition of Antwerp in 2015. These results clearly demonstrate that the weakness the business experienced in Q4 of last year and Q1 of this year was driven by one time factors that the big and now the big business began rebouncing in the Q2. The margin improvements initiative that we began implementing in Q3 last year are have begun to take hold. Speaker 200:07:44The backlog remained near record level, and we have increased the average margin within the backlog by roughly 100 to 200 basis point targets. Additionally, we successfully grow service revenue at Handsworth during the quarter, which are both higher margins and recurring in nature. Recall that this segment is seasonal and Q3 is traditionally the strongest quarter. All business units have been performing well, and we expect this segment to continue to deliver robust results going forward. We are happy to report that we also had success with our initiative and to more efficiently manage GDI balance sheets during the Q3. Speaker 200:08:28We delivered a reduction of €25,000,000 in operating working capital compared to Q2 of 2024. Together, with strong free cash flow generation, we were able to reduce GDI's net debt by $41,000,000 Our debt level is also benefit from the intended sales of the 2 facilities that were used by our superior solution business, which we expect will generate gross proceeds in the $25,000,000 to $30,000,000 range. To conclude, I think that GDI performed very well this quarter. Our Business Service segment is delivering solid and consistent results. Business Service USA was able to maintain revenue level in the face of this very large client repositioning, and it is focusing on improving margin in the Italian business. Speaker 200:09:21Technical Service has the strongest quarter in history, and the outlook for the business is robust. Our balance sheets improvement initiatives are gaining traction. We are reducing our debt and expect this to continue in Q4 and Q1 of next year. Our leverage ratios remains well within our comfort zone, and we are well positioned to continue to execute on our growth strategies. Well, that concludes our prepared remarks. Speaker 200:09:51Please, operator, feel free to open the calls to analysts for questions. Operator00:09:57Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Derek Lessard with TD Cowen. Your line is now open. Speaker 300:10:22Yes. Good morning, everybody, and congrats on a solid quarter Claude. Speaker 100:10:27Thank you very much, Derek. Speaker 300:10:29Yes. My first question is on the technical services. And I think you alluded to it in your prepared remarks on the record margin there. I was just curious, again, if you can just maybe give some comfort or some color around how sustainable you think that margin is and maybe just a little bit more color on the initiatives that you've put in place to improve that margin profile of that business? Speaker 200:10:55Well, thank you, Derek. That's a very good question. Our objectives as a technical business is we are aiming at a sustainable 7% overall. This is what we are focusing on. Yes, for sure, we had a very good quarter. Speaker 200:11:13Like I said, it's usually our strongest quarter, but the business is really aiming towards achieving the 7% constant margin over time. This is what we expect to deliver, and we're working hard on it. Now this being said, yes, like I said, we are measuring the improvement margins by the improvements of the margin in the billable work, but also with our backlog estimated margins. So we have seen now what we have seen is our margin have expanded from about 200 bps on the and I'm sorry, I have a lack of words in English, but on the last 12 months, if we say so, on the continuum basis, now we are over 200 bps over. So that's a very, very good news. Speaker 200:12:05So we continue to improve on that, working very hard on AR, getting our working cap at the best possible situation. So I'm very proud of what the team is achieving for the last 2, 3 quarters there. And again, we were able to complete and go through our bad projects of last year. Speaker 100:12:28Okay. Thanks for that. And just Speaker 300:12:30maybe switching gears to Business Services Canada, you did note that you have a number of contracts that are coming or contract wins in Q4 and Q1. So maybe could you provide some color on sort of what type of clients maybe or contracts those are and maybe quantify the size if you're able to? Speaker 200:12:51Well, I won't get into the every details, but we mainly have acquired clients in the commercial sector, so shopping centers, light industrials. So very regular clients that we are used to serve that we serve well. We have a little bit of mid manufacturing clients that joined that came to us. So there is not a huge client in Business Service Canada that show up. It's a sum of midsized clients that the sales team is working with. Speaker 100:13:33Thanks for that Claude. I'll requeue. Operator00:13:38Your next question comes from Frederic Tremblay with Desjardins. Your line is now open. Speaker 200:13:44Good morning, Frederic. Speaker 400:13:46Good morning, Claude. Congrats on the great quarter. How would you characterize the bidding environment for projects in Technical Services? And I guess when you look at Ainsworth's backlog and the projects that you're bidding on, you anticipate that that will be enough to get back to positive organic growth in technical services relatively soon or are we mostly working on the margins in technical services and less so on the top line growth front? Speaker 200:14:17The bidding environment is still strong. We still have, you know, if we look at the size of the backlog, so I will say it, please, I don't know if I should say that, but I'm very happy to realize that even though we are increasing our margins, we are able to acquire very good and strong clients. Where is the where is my challenge is to make sure that we work within an account receivable parameter, which is satisfactory to us. So we're pushing hard on generating the cash in the bank. So while we do both those initiatives, we still capture very good clients. Speaker 200:15:00So that's a good news for me. Speaker 400:15:03Okay, great. And you did touch on accounts receivables there. I was wondering, we saw a good progression on the working cap front in Q3. You feel like there is more to do there in Q4 and into 2025, maybe if you can get into some of your expectations on that? Speaker 200:15:19Well, Frederic, listen, we're working very hard on it. We're very focused on it. Now we don't have full controls of all the buttons, but we're working hard on it and we expect there's still some improvements in Q4. To what level, we still target and focus on what we said for the year. So we're pushing hard on it. Speaker 400:15:42Okay, great. And maybe if I can squeeze in one more. You did mention the gross proceeds of $25,000,000 to $30,000,000 potentially for the 2 facilities that you're looking to sell. Any updates sort of on discussions on that or your expectations on timing of getting those proceeds in the bank? Speaker 200:16:02Well, are you interested to buy? I can send you the book. It's on it now. Okay. No, well, listen, we are at the last step of putting the building to market. Speaker 200:16:14By doing that, we sold the Superior business couple of months ago and we still occupied the premises. Now we are shaping up the premises. We are fully engaged with the brokerage firms. So I would say that in the next over the next 4 weeks, we should have both There is a little bit of pre work done on the advertising of it, but probably in the next 4 weeks, we should be full blown on the market. We expect maybe 3 to 4 months turnaround. Speaker 200:16:46So if I was to make a bet, I would say Q1 for most of it, a big part of it and Q2 maybe for the remaining, the second building. So it should be expected that the 2025 cash flows. Operator00:17:00Okay, great. Your next question comes from Zachary Evershed with National Bank Financial. Your line is now open. Speaker 200:17:15Good morning, Zachary. Good morning. Speaker 500:17:18So just to follow-up on Fred's question, maybe you could remind us what you're expecting in terms of magnitude from the building sale proceeds? Speaker 200:17:2825 to 30 Speaker 400:17:33net. Perfect. Thanks. Speaker 500:17:37And with that hitting the balance sheet and some improvements on working capital, you're dipping under 3x net debt to EBITDA already. What's your appetite like for M and A at the moment? Speaker 200:17:49Well, we're still focused we're still very focused on our growth through M and A. Mind you that 2024, we work actively in several other areas that we need to focus on, but we are still very engaged. We have done 3 small acquisitions during the year. I can tell you that the team is focusing on but acquiring the right businesses of the technical services. We're focusing on where we have original presence, where we have a strong maintenance service line on the business service arena. Speaker 200:18:29We still are very disciplined in our pricing and our evaluation of the business. So again, the win is not to acquire at any price, it's to acquire sustainable business at the right price. Speaker 500:18:46Got you. Thanks. And then you made reference to the Italian integration and evaluating the lower margin contracts. What's left to do there and how much do you think Speaker 400:18:57you can do in the financial? Speaker 200:18:59I missed the first Verdec, I'm sorry, I missed the first part. You said $2,000,000,000 Italian, my apologies. Okay, okay. But it's work in progress. I can tell you that if I'm playing like this is on the security segment side, very interesting, very strong progress. Speaker 200:19:20We have increased the margins substantially. We have also, I hate to do this, but we had to depart from some clients where we could not increase the margin, thus contributing a little bit for our little organic decline. But we're working well with the clients. I expect that another 2, 3, 4 months we should be going with the business at the EBITDA level that we are targeting. So maybe another 2, 3 months and we should be there. Speaker 500:19:56Great color, thanks. Then just one quick last one. On the technical services margins, great progress there. The improvements that you're talking about, will they continue to reflect the seasonal pattern of Q4 dipping a little bit versus Q3 or is the power of the backlog enough to buck that seasonal trend? Speaker 200:20:16No, I think that we can expect Q4 to perform as expected. Q3 is our strongest, but Q4 is also a good quarter. So I don't see any major issues there. Backlog is there to support. The team is very focused on delivering. Speaker 200:20:33Like I said, the areas where we had some hiccups last year, they're full blown. I'm looking at their monthly results. They're consistent with their result now. So I'm expecting a very positive for Q4. But again, we don't expect to be we don't expect to be 8% every quarter going forward, but our objective and target is a sustainable 7% average year over year EBITDA. Speaker 200:20:59This is where we next step is there. After that, we see much next. Speaker 500:21:04Very clear. Thank you. I'll turn it over. Operator00:21:08Your next question comes from Derek Lessard with TD Cowen. Your line is now open. Speaker 300:21:14Yes, guys. I just have one last one, more of a housekeeping issue. Can you just maybe talk about your CapEx expectations for Q4 and how we should look at that looking out maybe to 2025 as well? Speaker 200:21:31Yes. Well, Bennett, this is Chad Etienne. Speaker 100:21:34We should have a CapEx in line with our trend like that we have like since the beginning of the year. Speaker 200:21:39Yes. Well, listen, you have to understand that starting new projects cost money. So there is a little bit of CapEx there, but overall, we are it's very rare what we get out of our 1% to 1.25% on the technical side or 0.75% to 1% on the business service side. But again, business service, they started a lot of new projects. So for sure, it does a little bit Speaker 100:22:05of swing, but nothing major. Okay. Thanks, gentlemen. That's all for me. Operator00:22:12There are no further questions at this time. I will now turn the call over to Mr. Ko Gika for closing remarks. Speaker 200:22:20Well, thank you very much, operator. Thank you very much again for listening to this conference call. I'd just like to pass my thanks and my congratulations to everyone that is operating and working in the business. It's a concerted effort, and I can tell you that everybody in their positions is swimming in the right directions, and they're pushing to get the business continue to develop the success that we have been. And I am very positive for Q4, but I'm also very positive for 2025. Speaker 200:22:58So thank you very much again for listening. Operator00:23:03Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in that space. Please disconnect your lines.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallGDI Integrated Facility Services Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release GDI Integrated Facility Services Earnings HeadlinesWith 32% ownership, GDI Integrated Facility Services Inc. (TSE:GDI) has piqued the interest of institutional investorsApril 10, 2025 | uk.finance.yahoo.comInvestors in GDI Integrated Facility Services (TSE:GDI) have unfortunately lost 37% over the last three yearsMarch 3, 2025 | finance.yahoo.comNow I look stupid. Real stupid... I thought what happened 25 years ago was a once- in-a-lifetime event… but how wrong I was. Because here we are, a quarter of a century later, almost to the exact day, and it’s happening again. April 25, 2025 | Porter & Company (Ad)Estimating The Fair Value Of GDI Integrated Facility Services Inc. (TSE:GDI)February 16, 2025 | finance.yahoo.com1 Undervalued TSX Stock Down 42% to Buy and HoldFebruary 15, 2025 | ca.finance.yahoo.comStrike averted as SEIU Local 2 janitors ratify agreement in HalifaxJanuary 26, 2025 | markets.businessinsider.comSee More GDI Integrated Facility Services Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like GDI Integrated Facility Services? Sign up for Earnings360's daily newsletter to receive timely earnings updates on GDI Integrated Facility Services and other key companies, straight to your email. Email Address About GDI Integrated Facility ServicesGDI Integrated Facility Services (TSE:GDI) Inc is engaged in the facility services sector. The company's operating segment includes Janitorial Canada, Janitorial USA, Technical services and Complementary Services. It generates maximum revenue from the Janitorial Canada segment. The Janitorial Canada and Janitorial USA segments provide a wide range of basic janitorial services, such as floor cleaning and finishing, window washing, furniture polishing, carpet cleaning, and dusting, as well as other building services including lawn maintenance, snow removal and other. It serves office properties, shopping centers, industrial and institutional buildings, educational facilities, health care centers, airports, hospitals, laboratories, national retail stores, and hotels.View GDI Integrated Facility Services ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step In Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Booking (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 6 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to the GDI Integrated Facility Services Inc. 3rd Quarter 2024 Results Conference Call. At this time, all lines are in listen only mode. Following the presentation, there will be we will conduct a question and answer session. This call is being recorded on Wednesday, November 13, 2024. Operator00:00:28I would now like to turn the conference over to Mr. Charles Etienne Gerois, Senior Vice President and Head of Finance. Please go ahead. Speaker 100:00:38Thank you, operator. Good morning, all, and welcome to GDI's conference call to discuss our results for the Q3 of fiscal 2024. My name is Charles Desjardins. I am Senior Vice President of Finance, Operations and Digital Transformation of GDI. I am with Claude Guigga, President and CEO of GDI and David Inchy, Executive Vice President of Corporate Development. Speaker 100:01:05Before we begin, I would like to make you aware that this call contains forward looking information and we ask listeners to refer to the full description of the forward looking Safe Harbor provision that is fully described at the beginning of the MD and A filed on SEDAR last night. I will begin the call with an overview of GDi financial results for the Q3 of fiscal 2024 and will then invite Claude to provide his comments on the business. In the Q3, GDi recorded revenue of $640,000,000 an increase of $25,000,000 or 4 percent over Q3 of last year, comprised of 5% growth from acquisition, 1% growth from the appreciation of the U. S. Dollar relative to the Canadian dollar, partially offset by a 2% organic decline. Speaker 100:01:57We recorded adjusted EBITDA of $39,000,000 in the quarter, in line with Q3 of last year and up $5,000,000 compared to Q2 2024. On a year to date basis, revenue increased by $108,000,000 or 6%, all coming from acquisition to reach $1,900,000,000 compared to $1,800,000,000 last year. Adjusted EBITDA year to date amounted to $100,000,000 a decrease of $6,000,000 or 6 percent over the corresponding period of 2023, mainly due to the cost overruns incurred in the 3 projects in our U. S. Technical service business at the beginning of the year and higher adjusted EBITDA in our Business Service Canada segment in 2023 due to efficiencies coming from COVID related lower office occupancy rates. Speaker 100:02:49Moving to our business segment. Business Service Canada recorded revenue of $145,000,000 in the 3rd quarter, while generated $12,000,000 of adjusted EBITDA for an adjusted EBITDA margin of 8%, which was in line with Q2 2024 and was about 2% lower than Q3 last year. Our Business Service USA segment recorded revenue of $222,000,000 in Q3, representing an increase of 37 compared to Q3, mainly to the Italian and Paramount acquisition and 1% organic decline despite the loss of a major customer in Q1 2024. This segment reported adjusted EBITDA of $14,000,000 in line with Q222 and Q3 last year. Our technical service segment recorded revenue of $264,000,000 compared to $269,000,000 in Q3 last year. Speaker 100:03:46The organic decline is explained by a decrease in lower margin project revenues versus this quarter versus the same quarter of last year. This segment generated an adjusted EBITDA of $20,000,000 representing an adjusted EBITDA margin of 8%, which is $4,000,000 higher than Q3 last year. The 3rd quarter is typically the technical service segment's seasonally strongest quarter. Finally, our corporate and other segment reported revenue of $9,000,000 compared to $15,000,000 last year, mainly due to the sale of our superior distribution and retail business at the beginning of Q2, which was partially offset by the growth generated by our U. S. Speaker 100:04:25Chemical manufacturing business. I would like to turn the call to Claude, who will provide further comments on GDI performance during the quarter. Speaker 200:04:34Well, thank you, Charles Etienne, and thanks to all of you who are participating in GDI's 3rd quarter's conference call. I'd like to start by publicly welcoming Charles Etienne as lead of the finance teams, GDI's finance team. He officially took over from Stephane Laveing on October 1, and is now in charge of finance for GDI. Stephane is still with GDI in a consulting capacity to support Charles Etienne in his transition, and he's among us this morning. Thank you, Stephane. Speaker 200:05:06I'm quite pleased with GDI's results in the Q3. Our Canadian business segments delivered an adjusted EBITDA margin of 8%, which was in line with both Q1 and Q2 of this year. Our Canadian business is seeing a relatively stable level of occupancy in the Class A markets, which is evidenced by a very strong a very consistent margin profile for the business in 2024. Organic growth in the business was down slightly in Q3. However, this is the result of timing differences between contract wins and losses, and we had the numbers of new contract wins that will start up in Q4 and Q1 of next year. Speaker 200:05:50That should help to support our organic growth numbers and targets. Our U. S. Business service segment delivered slightly negative organic growth as well, which was driven by the repositioning of the business largest clients, the bulk of which incurred at the end of Q1 this year. We still be experiencing headwinds in quarters over quarter organic growth comparisons from this event for the next two quarters. Speaker 200:06:15But however, I'm very encouraged that our teams was able to replace almost all the revenue with new business wins in a relatively short period of time. Also during the quarter, we continued to work on margin improvements initiatives at our Italian acquisitions. While it's taking a bit longer than we initially planned, we expect to complete the process by Q1 of next year. When comparing Q3 of 2024 to the Q3 of last year, our U. S. Speaker 200:06:47And Canada Business Service segment were burdened with an additional $3,000,000 of costs on a combined basis because there was an extra work day in this year's quarter. I'm very encouraged that both businesses were able to deliver strong results when compared to the prior year's quarter despite this hurdle. Our technical service segment delivered a very strong quarter with an adjusted EBITDA margin of 8%, the highest recorded in the business since the acquisition of Antwerp in 2015. These results clearly demonstrate that the weakness the business experienced in Q4 of last year and Q1 of this year was driven by one time factors that the big and now the big business began rebouncing in the Q2. The margin improvements initiative that we began implementing in Q3 last year are have begun to take hold. Speaker 200:07:44The backlog remained near record level, and we have increased the average margin within the backlog by roughly 100 to 200 basis point targets. Additionally, we successfully grow service revenue at Handsworth during the quarter, which are both higher margins and recurring in nature. Recall that this segment is seasonal and Q3 is traditionally the strongest quarter. All business units have been performing well, and we expect this segment to continue to deliver robust results going forward. We are happy to report that we also had success with our initiative and to more efficiently manage GDI balance sheets during the Q3. Speaker 200:08:28We delivered a reduction of €25,000,000 in operating working capital compared to Q2 of 2024. Together, with strong free cash flow generation, we were able to reduce GDI's net debt by $41,000,000 Our debt level is also benefit from the intended sales of the 2 facilities that were used by our superior solution business, which we expect will generate gross proceeds in the $25,000,000 to $30,000,000 range. To conclude, I think that GDI performed very well this quarter. Our Business Service segment is delivering solid and consistent results. Business Service USA was able to maintain revenue level in the face of this very large client repositioning, and it is focusing on improving margin in the Italian business. Speaker 200:09:21Technical Service has the strongest quarter in history, and the outlook for the business is robust. Our balance sheets improvement initiatives are gaining traction. We are reducing our debt and expect this to continue in Q4 and Q1 of next year. Our leverage ratios remains well within our comfort zone, and we are well positioned to continue to execute on our growth strategies. Well, that concludes our prepared remarks. Speaker 200:09:51Please, operator, feel free to open the calls to analysts for questions. Operator00:09:57Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Derek Lessard with TD Cowen. Your line is now open. Speaker 300:10:22Yes. Good morning, everybody, and congrats on a solid quarter Claude. Speaker 100:10:27Thank you very much, Derek. Speaker 300:10:29Yes. My first question is on the technical services. And I think you alluded to it in your prepared remarks on the record margin there. I was just curious, again, if you can just maybe give some comfort or some color around how sustainable you think that margin is and maybe just a little bit more color on the initiatives that you've put in place to improve that margin profile of that business? Speaker 200:10:55Well, thank you, Derek. That's a very good question. Our objectives as a technical business is we are aiming at a sustainable 7% overall. This is what we are focusing on. Yes, for sure, we had a very good quarter. Speaker 200:11:13Like I said, it's usually our strongest quarter, but the business is really aiming towards achieving the 7% constant margin over time. This is what we expect to deliver, and we're working hard on it. Now this being said, yes, like I said, we are measuring the improvement margins by the improvements of the margin in the billable work, but also with our backlog estimated margins. So we have seen now what we have seen is our margin have expanded from about 200 bps on the and I'm sorry, I have a lack of words in English, but on the last 12 months, if we say so, on the continuum basis, now we are over 200 bps over. So that's a very, very good news. Speaker 200:12:05So we continue to improve on that, working very hard on AR, getting our working cap at the best possible situation. So I'm very proud of what the team is achieving for the last 2, 3 quarters there. And again, we were able to complete and go through our bad projects of last year. Speaker 100:12:28Okay. Thanks for that. And just Speaker 300:12:30maybe switching gears to Business Services Canada, you did note that you have a number of contracts that are coming or contract wins in Q4 and Q1. So maybe could you provide some color on sort of what type of clients maybe or contracts those are and maybe quantify the size if you're able to? Speaker 200:12:51Well, I won't get into the every details, but we mainly have acquired clients in the commercial sector, so shopping centers, light industrials. So very regular clients that we are used to serve that we serve well. We have a little bit of mid manufacturing clients that joined that came to us. So there is not a huge client in Business Service Canada that show up. It's a sum of midsized clients that the sales team is working with. Speaker 100:13:33Thanks for that Claude. I'll requeue. Operator00:13:38Your next question comes from Frederic Tremblay with Desjardins. Your line is now open. Speaker 200:13:44Good morning, Frederic. Speaker 400:13:46Good morning, Claude. Congrats on the great quarter. How would you characterize the bidding environment for projects in Technical Services? And I guess when you look at Ainsworth's backlog and the projects that you're bidding on, you anticipate that that will be enough to get back to positive organic growth in technical services relatively soon or are we mostly working on the margins in technical services and less so on the top line growth front? Speaker 200:14:17The bidding environment is still strong. We still have, you know, if we look at the size of the backlog, so I will say it, please, I don't know if I should say that, but I'm very happy to realize that even though we are increasing our margins, we are able to acquire very good and strong clients. Where is the where is my challenge is to make sure that we work within an account receivable parameter, which is satisfactory to us. So we're pushing hard on generating the cash in the bank. So while we do both those initiatives, we still capture very good clients. Speaker 200:15:00So that's a good news for me. Speaker 400:15:03Okay, great. And you did touch on accounts receivables there. I was wondering, we saw a good progression on the working cap front in Q3. You feel like there is more to do there in Q4 and into 2025, maybe if you can get into some of your expectations on that? Speaker 200:15:19Well, Frederic, listen, we're working very hard on it. We're very focused on it. Now we don't have full controls of all the buttons, but we're working hard on it and we expect there's still some improvements in Q4. To what level, we still target and focus on what we said for the year. So we're pushing hard on it. Speaker 400:15:42Okay, great. And maybe if I can squeeze in one more. You did mention the gross proceeds of $25,000,000 to $30,000,000 potentially for the 2 facilities that you're looking to sell. Any updates sort of on discussions on that or your expectations on timing of getting those proceeds in the bank? Speaker 200:16:02Well, are you interested to buy? I can send you the book. It's on it now. Okay. No, well, listen, we are at the last step of putting the building to market. Speaker 200:16:14By doing that, we sold the Superior business couple of months ago and we still occupied the premises. Now we are shaping up the premises. We are fully engaged with the brokerage firms. So I would say that in the next over the next 4 weeks, we should have both There is a little bit of pre work done on the advertising of it, but probably in the next 4 weeks, we should be full blown on the market. We expect maybe 3 to 4 months turnaround. Speaker 200:16:46So if I was to make a bet, I would say Q1 for most of it, a big part of it and Q2 maybe for the remaining, the second building. So it should be expected that the 2025 cash flows. Operator00:17:00Okay, great. Your next question comes from Zachary Evershed with National Bank Financial. Your line is now open. Speaker 200:17:15Good morning, Zachary. Good morning. Speaker 500:17:18So just to follow-up on Fred's question, maybe you could remind us what you're expecting in terms of magnitude from the building sale proceeds? Speaker 200:17:2825 to 30 Speaker 400:17:33net. Perfect. Thanks. Speaker 500:17:37And with that hitting the balance sheet and some improvements on working capital, you're dipping under 3x net debt to EBITDA already. What's your appetite like for M and A at the moment? Speaker 200:17:49Well, we're still focused we're still very focused on our growth through M and A. Mind you that 2024, we work actively in several other areas that we need to focus on, but we are still very engaged. We have done 3 small acquisitions during the year. I can tell you that the team is focusing on but acquiring the right businesses of the technical services. We're focusing on where we have original presence, where we have a strong maintenance service line on the business service arena. Speaker 200:18:29We still are very disciplined in our pricing and our evaluation of the business. So again, the win is not to acquire at any price, it's to acquire sustainable business at the right price. Speaker 500:18:46Got you. Thanks. And then you made reference to the Italian integration and evaluating the lower margin contracts. What's left to do there and how much do you think Speaker 400:18:57you can do in the financial? Speaker 200:18:59I missed the first Verdec, I'm sorry, I missed the first part. You said $2,000,000,000 Italian, my apologies. Okay, okay. But it's work in progress. I can tell you that if I'm playing like this is on the security segment side, very interesting, very strong progress. Speaker 200:19:20We have increased the margins substantially. We have also, I hate to do this, but we had to depart from some clients where we could not increase the margin, thus contributing a little bit for our little organic decline. But we're working well with the clients. I expect that another 2, 3, 4 months we should be going with the business at the EBITDA level that we are targeting. So maybe another 2, 3 months and we should be there. Speaker 500:19:56Great color, thanks. Then just one quick last one. On the technical services margins, great progress there. The improvements that you're talking about, will they continue to reflect the seasonal pattern of Q4 dipping a little bit versus Q3 or is the power of the backlog enough to buck that seasonal trend? Speaker 200:20:16No, I think that we can expect Q4 to perform as expected. Q3 is our strongest, but Q4 is also a good quarter. So I don't see any major issues there. Backlog is there to support. The team is very focused on delivering. Speaker 200:20:33Like I said, the areas where we had some hiccups last year, they're full blown. I'm looking at their monthly results. They're consistent with their result now. So I'm expecting a very positive for Q4. But again, we don't expect to be we don't expect to be 8% every quarter going forward, but our objective and target is a sustainable 7% average year over year EBITDA. Speaker 200:20:59This is where we next step is there. After that, we see much next. Speaker 500:21:04Very clear. Thank you. I'll turn it over. Operator00:21:08Your next question comes from Derek Lessard with TD Cowen. Your line is now open. Speaker 300:21:14Yes, guys. I just have one last one, more of a housekeeping issue. Can you just maybe talk about your CapEx expectations for Q4 and how we should look at that looking out maybe to 2025 as well? Speaker 200:21:31Yes. Well, Bennett, this is Chad Etienne. Speaker 100:21:34We should have a CapEx in line with our trend like that we have like since the beginning of the year. Speaker 200:21:39Yes. Well, listen, you have to understand that starting new projects cost money. So there is a little bit of CapEx there, but overall, we are it's very rare what we get out of our 1% to 1.25% on the technical side or 0.75% to 1% on the business service side. But again, business service, they started a lot of new projects. So for sure, it does a little bit Speaker 100:22:05of swing, but nothing major. Okay. Thanks, gentlemen. That's all for me. Operator00:22:12There are no further questions at this time. I will now turn the call over to Mr. Ko Gika for closing remarks. Speaker 200:22:20Well, thank you very much, operator. Thank you very much again for listening to this conference call. I'd just like to pass my thanks and my congratulations to everyone that is operating and working in the business. It's a concerted effort, and I can tell you that everybody in their positions is swimming in the right directions, and they're pushing to get the business continue to develop the success that we have been. And I am very positive for Q4, but I'm also very positive for 2025. Speaker 200:22:58So thank you very much again for listening. Operator00:23:03Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in that space. Please disconnect your lines.Read morePowered by