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Edited Transcript of IBG.TO earnings conference call or presentation 8-May-20 12:30pm GMT

Q1 2020 IBI Group Inc Earnings Call

TORONTO May 9, 2020 (Thomson StreetEvents) -- Edited Transcript of IBI Group Inc earnings conference call or presentation Friday, May 8, 2020 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Scott E. Stewart

IBI Group Inc. - CEO & Director

* Stephen B. Taylor

IBI Group Inc. - CFO

* Stephen J. Jones

Covanta Holding Corporation - President, CEO & Director

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Conference Call Participants

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* Frederic Bastien

Raymond James Ltd., Research Division - MD & Equity Research Analyst

* Mark Stuebing

TD Securities Equity Research - Associate

* Maxim Sytchev

National Bank Financial, Inc., Research Division - MD & AEC-Sector Analyst

* Mona Nazir

Laurentian Bank Securities, Inc., Research Division - Director of Research and Transportation & Infrastructure Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. Welcome to the IBI Group First Quarter 2020 Results Conference Call. Please note that IBI's complete financial statements and management's discussion and analysis for the period ended March 31, 2020, were filed on SEDAR and have been posted on IBI's website at www.ibigroup.com. (Operator Instruction] As a reminder, this conference call is being recorded.

Some of the statements on today's call might contain forward-looking information. Listeners are cautioned not to place undue reliance on these forward-looking statements since a number of factors could cause the actual future results to differ materially from the targets and expectations expressed. The company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, unless expressly required by applicable securities law. For further information on risk factors, please view the company's annual information form filed on the Canadian securities regulatory authorities and available on the company's website, the SEDAR website or by contacting IBI directly.

All amounts discussed today are in Canadian dollars, unless otherwise stated.

I would now like to turn the conference call over to Mr. Scott Stewart, Chief Executive Officer for IBI Group. Please go ahead, Mr. Stewart.

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Scott E. Stewart, IBI Group Inc. - CEO & Director [2]

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Thank you very much. Good morning, and thank you for joining us for IBI's First Quarter 2020 Results Conference Call and for an update on our response to the COVID-19 pandemic and overview of how we see business today.

I'm joined today, at a safe distance from Stephen and Bob, with Stephen Taylor, IBI Group's Chief Financial Officer. And I hope that everyone has remained healthy and safe during this extraordinary time.

IBI Group's response to COVID-19 crisis have been rapid and effective. We have prioritized the health and safety of our staff and other stakeholders while continuing to fulfill our obligations and commitments to clients. The COVID-19 situation has truly demonstrated the competitive advantage of being a technology-driven design firm. IBI had already established internal systems and automations, including our firm-wide adoption of Office 365 and Microsoft Teams prior to or as part of our tech pivot. And with the strength of our IT and design technology teams, we were well prepared to navigate the challenges of this global pandemic.

Within 2 weeks, IBI had successfully transitioned our entire 2,700-person team to a fully remote workforce with minimal disruption to productivity. Since then, we have extended IT support hours to better align with some of the new work patterns of our staff, especially those with school-age children.

We continue to monitor remote work performance regularly, implement strategies or resources to improve our employees' abilities to effectively work from home. To help protect staff, we may need to go into the office. We have implemented extra sanitization of our offices and have been vigilant about separating any at-risk staff from the rest of the workforce.

Our internal and client meetings are being held virtually. We have suspended all business travel and implemented safety protocols for essential project site attendance. IBI's ability, our agility, our ability to innovate and the use of new technology has allowed us to contribute meaningfully to crisis relief efforts in a number of our practice areas.

IBI's Quantum design team developed a parametric model that uses existing COVID-19 keys use projections and the best available hospital data to generate insights in capacity and resource planning. This helps over 20 healthcare facilities prepare for peak demands in the U.K. and in North America. IBI has also helped establish COVID-19 testing facilities in vacant lots and developed protocols to leverage airports and airport hotels as quarantine facilities for returning citizens.

Our global healthcare practice developed an 11-step streamlined process that converts unused exhibit halls, stadiums, warehouses and retail spaces into fully functional provisional care centers in as few as 4 weeks. Our teams are expert in acute community and senior care environment, meaning we have continued engagement in these dialogues with the clients and communities.

The team is also working with hospitals to identify opportunities to add incremental beds to less- traffic areas, such as operating theaters, waiting areas and emergency departments and are helping hospitals establish patient care flows to ensure that care is provided in a safe and controlled environment.

Throughout the planning and operational stages of these projects, clients have been able to leverage IBI's InForm solution for the storage and access of important information. In addition, we are applying our unique design and technology capabilities to combat the spread of COVID-19 by joining forces with other firms in North America and the U.K. IBI is leverage in equipment such as laser cutting and 3D-printing technology and together, we're responding to the overwhelming demand for face shield and other personal protective equipments for the front-line health care workers.

Our Intelligence practice has developed and delivered several key software solutions, which have been deployed during COVID-19. We enhanced our TravelIQ solution already in use in a number of jurisdictions across North America, but for the Ontario Ministry of Transportation, we included a trucker mode that connected trucks to essential touch points along the routes, including service stations and rest stops that remain open for business throughout the crisis. All are critical in terms of the supply chain.

In addition, we supported the MTO in its efforts to provide improved services to essential supply chain workers by helping them rapidly deploy mobile app version of Ontario 511 in only 2 weeks. IBI has also made updates to its advanced traffic management software to better support remote operations and implement cashless payment solutions for our toll clients.

Using our Smart City platform technology, we developed the Canadian COVID-19 dashboard that displays current and historical COVID data on a national scale, along with information related to healthcare facilities. This tool has been provided at low cost in an effort to help Canada manage the the COVID-19 pandemic. With the dashboard, public and private organizations can visualize and analyze weekly trends across the country on case and COVID recovery rates, still down to local and regional health levels and even filtered by demographic trends within communities.

In addition, we are investing in planning and monitoring health and other outcomes associated with restarting the economy, both regionally and on a community scale.

Through the month of April, we experienced a healthy influx of work within the Buildings practice, including being awarded 6 new rental and condo buildings in the GTA alone. This is all down to the last week of April and includes some 1,500 new housing units. We believe this achievement points to a continued optimism across this segment of the economy.

Certain subsectors, such as education, are working along at a pace equivalent pre COVID, as well as projects have been accelerated to take advantage of school closures that will likely extend into the fall and benefit from leveraging our technology infrastructure going forward.

I'm very proud of IBI's staff globally. We have demonstrated strength, resilience and creativity during these extraordinary circumstances. We're doing everything possible to ensure our business stays financially healthy, including undertaking regular reviews to benefit from the opportunities to streamline and enhance efficiencies. We have demonstrated the important role of technology and how it improves our efficiency and will do so, increasingly, into the future, especially as we build more resilient cities and more resilient urban environment.

IBI is now regularly having conversations about the future of the workplace and how physical spaces will be altered as part of the new normal, allowing us to deploy technology in a new manner that will provide benefits to our teams, clients and other stakeholders while further advancing our commitment to sustainable environment.

Given that people represent the most significant asset for IBI, a review of the business naturally includes a review of staffing levels. While the firm is in the process of tightening up wherever possible, we have maintained staffing levels consistent with those required to be able to execute our workload.

We are diligent about implementing cost management initiatives, wherever possible, and as such as adjusting executive and board compensation levels. My salary has been reduced by 15%, while the salaries of other senior leadership colleagues and other managers have been reduced by 10% and 5%, respectively. Our Board of Directors have reduced their annual cash retainers by 10% while the Chairman of the Board's retainer has been reduced by 15%.

To further support this area of our business, we may explore opportunities to access credit support during the Government of Canada through the export Development Corporation.

I will now hand over the call to Stephen Taylor, our Financial Officer, to run through some of IBI's key financial results.

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Stephen B. Taylor, IBI Group Inc. - CFO [3]

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Thank you, Scott. Our total net revenue for the period was $96.7 million, up 3% over the same period in 2019 and up 5% over the fourth quarter of 2019. Adjusted EBITDA was 35% higher than the prior quarter at $9.2 million or 9.5% of revenue, but was impacted by a nonrecurring cash payment of $1.2 million related to the onerous lease in Montréal. Excluding that onetime payment, adjusted EBITDA would have been $10.4 million or 10.8% of revenue for the period.

If IBI chose to exclude the impact of IFRS 16, consistent with many of our industry peers, adjusted EBITDA would have been $14 million or 14.5% in line with Q1 of last year.

IBI's strong Q1 results reflect improved performance from our Intelligence and Infrastructure practices. In Q1 2020, revenue from Intelligence represented 21% of overall revenue. And adjusted EBITDA as a percentage of net revenue from the practice was 18.8%. This effectively positions IBI in line with our target of Intelligence generating 20% of net revenue with adjusted EBITDA representing 20% of net Intelligence revenue by the end of 2020.

As noted in the release, we are now providing a breakdown of billings from IBI's software support and maintenance services that renew annually and represent the contracted annualized invoice amounts charged to clients. In Q1 2020, $5.3 million was billed to clients related to recurring software support and maintenance services, 8% higher than the same period last year and reflecting the additional clients and annual subscriptions gain since Q1 of 2019.

Infrastructure net revenue of $27.2 million was 6% higher than Q1 2019, while adjusted EBITDA rose 67% year-over-year. Net revenue from our Buildings practice was $49 million, 4% lower than Q1 2019 and 11% higher than Q4 2019, with adjusted EBITDA of $5.9 million or 12.1% of Buildings net revenue. Results from Buildings in Q1 reflect some

projects that were put on hold, particularly in mixed-use high rise markets in the U.S.

Our cash collections and efforts to reduce aging receivables have remained solid with no material deterioration, but obviously, we will be watching this closely over the coming months.

Day sales outstanding, or DSOs, were 67 days in Q1 2020, 3 days higher than -- lower than Q1 2019, but higher than the previous quarter due to accelerated cash intake in Q4 of 2019. IBI's quarter end net debt remained conservative at $84.6 million, reflecting no change in the draw on our credit facility but offset by lower cash balances. This is because more cash is used through the first half of each year as a number of annual payments are due in the first quarter.

IBI's net debt to adjusted EBITDA multiple was 2.1x, which is at the low end of our target range of 2.0 to 2.5x. We remain committed to strengthening liquidity and minimizing debt levels, which is top of mind considering the operating environment caused by the global pandemic.

As at March 31, 2020, IBI had $486 million of work committed and under contract for the next 5 years, representing about 15 months of backlog across the firm, 24% higher than the backlog at March 31, 2019. We realized strong increases in backlog across each of our business practices with Buildings backlog increasing 25%, Infrastructure increasing 22% and Intelligence increasing 24%. As of today, our backlog totals $502 million, which is reflective of IBI's improved pace of securing work and positions us well for both the near and longer term.

We remain cautiously optimistic regarding the future. However, the impacts of COVID-19 on the company have not yet been fully realized nor can the future impact be measured at this time. Therefore,

IBI is not in a position to reaffirm our previously provided guidance for 2020. However, because of our unique business model, diversified service offerings and the fact that a high degree of our current client projects are deemed essential, we believe that IBI is well positioned for the balance of 2020. In addition, given our 15-month backlog at the end of the quarter, we are also in a strong position to meet working capital needs with current cash reserves and available credit facility borrowings.

With that, I'll turn it back to Scott for some closing remarks before we take questions.

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Scott E. Stewart, IBI Group Inc. - CEO & Director [4]

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Thanks, Stephen. Considering the unprecedented events we have observed in the market due to COVID-19, we will continue to consistently review and implement measures to improve the monitoring of financials, strengthen billing processes, find new opportunities to enhance margins and most importantly, to ensure safety of our employees and stakeholders.

IBI's strong position heading into COVID-19 with 15 months of backlog and a healthy balance sheet really set us apart. Our proven ability to innovate, combined with expertise in design and solutions to respond to our client's needs has positioned us well to adapt to the rapidly evolving circumstances. We're committed to delivering our services better, faster and more economical to meet our clients' needs today and in the weeks and months ahead. We appreciate the support of our employees, shareholders and all stakeholder throughout.

Later this morning at 10 AM, we will also invite you to join us for a live webcast of IBI's AGM, which will include the keynotes of slide presentation and provided an update on IBI's achievements related to our technology pivot. Please see our press release from today or our website for a link to joint the webcast.

This concludes our formal remarks. Operator, we are now ready to take questions.

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Questions and Answers

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Operator [1]

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[Operator Instruction] So your first question comes from Mona Nazir of Laurentian Bank.

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Mona Nazir, Laurentian Bank Securities, Inc., Research Division - Director of Research and Transportation & Infrastructure Analyst [2]

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So within the quarter we're seeing a more meaningful impact from the Intelligence offering in regards to both revenue and margin. I'm just wondering, we saw it offset some of the weakness, particularly within the Buildings segment. And I know it's early days as we think about Q2 and the balance of the year. But I'm just wondering if Intelligence's strength can continue at this level or could it uptick? I'm just wondering what you're seeing on the horizon?

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Stephen B. Taylor, IBI Group Inc. - CFO [3]

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We -- I would say that it will continue at this rate of growth. It's a little too early to anticipate what current situation in terms of COVID-19 might mean if we do see it as an opportunity. But in terms of our planning, going forward, we see maintaining the recent trends. That being said, we are investing in other and new solutions that we will be launching in next quarter and throughout the remaining part of the year that we see will provide new opportunities for revenue. But because they are new products and solutions, we really can't predict fully what the extent would be in terms of realized revenues and margins.

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Mona Nazir, Laurentian Bank Securities, Inc., Research Division - Director of Research and Transportation & Infrastructure Analyst [4]

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Okay. That's very helpful. And just secondly, I understand that when it comes to guidance, you're unable to affirm the 2020 target on the back of COVID. But just looking at some of the peers -- some of your peers are offering kind of revenue goal post for the upcoming Q2 period. And others are focused on cash flow and a base margin level. I'm just wondering if you could speak about your internal targets for what you're seeing for the upcoming quarter. Also, I don't know if this is a read through, but if compensation is cut, is that because you're expecting margin weakness? Or you're trying to preserve the margin profile?

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Stephen B. Taylor, IBI Group Inc. - CFO [5]

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Let me offer part of -- a partial answer. In the latter case, look we are in uncertain times. And we have made certain adjustments in terms of compensation to some staff, and we've seen -- we've had to take other actions in terms of furlough for staff. We feel that it's also incumbent upon senior leadership, including the Board, to participate in any challenges that are being faced and any hardships that are being faced across the firm. It's important that we demonstrate our commitment as well. We are doing it more to ensure or protect and guard against some of the challenges and challenges that we really don't know at the moment, as just providing some extra insurance against the -- again uncertainty of what lies ahead with COVID-19.

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Mona Nazir, Laurentian Bank Securities, Inc., Research Division - Director of Research and Transportation & Infrastructure Analyst [6]

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Okay. That's helpful. And just when -- I'm thinking about your verticals where you're seeing the most impact or greatest impact? Is it a residential sector? And this is just another clarification, but I haven't heard you guys speak about any energy exposure. And I wanted to clarify if you had any revenue that stems from the sector?

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Scott E. Stewart, IBI Group Inc. - CEO & Director [7]

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In the -- to respond, we have -- in the increase in backlog, just in the month of April, we've had something in the order of $20 million of new work signed up in our Buildings sector. And that is still in the building -- in the residential with a stronger move with long-term patient money typically from pension funds to rental as opposed to condo. I should also note that we still have something in the order of 90 major planning projects, representing some 8,000 acres of land across North America that are long-term projects, setting up the equivalent of the CN Lands or Liberty Village that sets out multi-years of work for us in the Building and Infrastructure sector. So as much as there could be, and we're protecting against it as best as we can, an impact maybe later in the year or in next year in some of our core areas. We see that the long-term is very strong.

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Stephen B. Taylor, IBI Group Inc. - CFO [8]

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Mona, the one thing that we are seeing is that in the province of Alberta, where we in past have done very well as -- particularly new residential building has gone on there. We are starting to see the impact of low oil prices, resulting in some projects being slowed down or pushed out by developers in the Alberta marketplace. So that's something we're watching carefully. And while it's not directly related to oil, it's related more to the Alberta economy.

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Operator [9]

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Your next question comes from Mark Stuebing from TD Securities.

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Mark Stuebing, TD Securities Equity Research - Associate [10]

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Obviously, the current operating environment remains very fluid. I'm wondering if you can provide a bit of color on how the performance of your business has evolved in April versus March or even over the past couple of weeks? Any detail would be helpful.

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Scott E. Stewart, IBI Group Inc. - CEO & Director [11]

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The -- first off, we haven't seen any appreciable impact on our ability to execute work, even though all 2,700 staff are working from home. We have extra tools and techniques in place to be able to assist staff so that they are effective. And we haven't seen any lessening of the engagement and work. So that's part of it. We have not seen, and I think to the comment that Stephen has provided, we are still seeing work coming in through the month of April. And although we had seen a pause in a few projects and a couple of projects being canceled in the U.S. in the private sector, all of our public work is continuing at pace. And we -- in fact, we've had certain accelerated projects that had come in, in the intelligence area because of the need to put new work in place such as the trucking feature for the Ontario Ministry of Transportation. So we've not seen any notable segregate weakening in our market due to our backlog of work in April.

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Mark Stuebing, TD Securities Equity Research - Associate [12]

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Wondering if you could help me understand the onerous lease charge incurred in the quarter. See you have this cash payment, it's said to be nonrecurring, but if you recall that we have seen these charges at various points over the past year. Just wondering how this charge is different versus the prior ones? And then to what extent we can expect more charges going forward?

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Stephen B. Taylor, IBI Group Inc. - CFO [13]

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So this onerous lease is something that's been -- we've been stuck with since we divested of our Québec operations in 2014. we have 4 floors of office space in Montréal. We have a sublease tenants on 3 of those 4 floors. So every quarter, we do have some cash outflow payments related to that one empty floor. This particular payment that -- or $1.2 million payment was some tenant inducements that we had to pay to the sublease tenant. And this is the reason why it's not a recurring payment. It's not -- it's onetime. They have leased the space through to the end of our lease obligation.

So the only that -- as we move back into Q2, 3 and 4 of this year, the outflows on this onerous lease will be in the vicinity of $220,000 a quarter, which is basically what the recurring charge has been for the entire period since 2014. So this is the reason why we're saying that the $1.2 million is an item outside the realm of what we normally pay.

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Mark Stuebing, TD Securities Equity Research - Associate [14]

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Okay. Yes. That clarifies things. In your prepared remarks, you mentioned that IBI had seen some incremental opportunities such as the trucking feature, the Ministry of Transportation as a direct result of COVID-19 or the current downturn.

Just wondering if you could talk about the sustainability of these opportunities going forward. Or if they're more one-off projects?

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Scott E. Stewart, IBI Group Inc. - CEO & Director [15]

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They -- well, maybe to provide some context to the traveler -- or TravelIQ. We now have some 12 TravelIQ deployments across North America, from Alaska to Florida, all set up as software as a service. And the way we have now set this up is that in the new cloud arrangement, we're now targeting every community, city and as well as state authorities across North America. So we see it as a much longer-term opportunity for us. In other areas that are related to our, if you will, design practice, we built an asset management planning tool called InForm that takes our design platforms and allows us then to manage the assets within the design. We see opportunities that are -- will arise and are arising as a result of, especially the go-back-to-work arrangements so the InForm platform becomes part of that.

We see that office space will be managed -- actively managed and not just left, if you will, to opening doors and let people move about. And so we're applying it, developing and refining it so it can be applied for hot desk management, room bookings, cleaning, self diagnosis and the like. And we see significant opportunities.

But that's only one of the many. We have another product that we're developing related to street side regulations and management. And one of the areas where it has come to the form more recently is the ability to regulate curbside activities for pickups because that's the way that restaurants and other platforms and stores are continuing to operate with the curbside pickup and the opportunity to then to regulate those kinds of environments in a much different way.

There are a host of opportunities, in fact, that we see are now triggered because of COVID-19 and the need to -- or thoroughly manage the use of state's management and control of environments.

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Mark Stuebing, TD Securities Equity Research - Associate [16]

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And then last question for me. I understand you've taken some steps to reduce expenses. Wondering if you could provide some detail on the timing of these cost reduction measures. Did margins in Q1 benefit at all from these? Or is this more of a Q2 story? And if possible, could you comment on the scale of savings?

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Scott E. Stewart, IBI Group Inc. - CEO & Director [17]

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The -- let me respond to the first part, and that is that they have happened in April. So they didn't have -- they weren't tracking the Q1 results. They are responding to -- for example, the Alberta economic situation and adjusting staff there. And in certain other environments where the development, Mark, and I'm specifically thinking of greenfield development, subdivision development, had slowed down. And so staff, in most cases, are now operating a 4-day work weeks. And again, that was just put into effect in April. You want to add to that, Stephen?

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Stephen B. Taylor, IBI Group Inc. - CFO [18]

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No. There hasn't been any impact at all on the Q1 results. And we'll be commenting further on the impact of these changes when they more fully unfold and when we report on the second quarter.

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Operator [19]

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Your next question comes from Frederic Bastien of Raymond James.

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Frederic Bastien, Raymond James Ltd., Research Division - MD & Equity Research Analyst [20]

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I was wondering if you could comment on how well your U.K. and international operations are coping currently. Just curious if they're facing similar challenges to what your U.S. and Canadian operations might be facing and also whether they're facing similar or different opportunities.

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Scott E. Stewart, IBI Group Inc. - CEO & Director [21]

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Let me touch on a few of them, Frederic. The first, in Greece, where it's primarily a technology operation and heavily focused on tolling. There's actually been an increase in work as a result of the desire among all of our clients there to go to contactless operations. So it has led them to new work to assist them in deploying that new kind of service. In Israel, work continues to pace on the Redline LRT. It is considered an essential project. And although we're working from home, we are still very avidly engaged in supporting the construction of that facility.

In India, all of our staff are working from home, except for a few staff who, again, are working on toll projects, where they are on-site again, because it is considered an essential service. We have not seen any scaling back of work in India, and we are using that quite fully to assist in the development of various tools and platforms that we are developing as far as India, the pivot.

In Mexico, it's really largely from the amount of supporting systems that we've deployed. Again, toll systems are a much -- major part of that. In the Middle East, we are still working in Saudi Arabia on planning projects and working from home. For most of that, we're not seeing a slowdown in that activity. The U.K. is -- we have an Intelligence practice headquartered out of Scotland. That has been stable. You see our health care practice in the U.K. strengthening, in part, because of COVID-19. Where we see the weakness in the U.K. is in our urban planning and buildings, living plus environment where there isn't the same degree of activity in terms of new residential development there.

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Frederic Bastien, Raymond James Ltd., Research Division - MD & Equity Research Analyst [22]

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Great. That's helpful. And just wanted to get a bit of color on sort of the projects that -- have been halted? Or is it really a question of security with respect to COVID? Or I mean, have you seen some projects just being halted because of the related impact it's having on economic activity and some people are just pulling the plug.

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Scott E. Stewart, IBI Group Inc. - CEO & Director [23]

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The -- most of that where it has taken place has been -- at least to date, has been in the private sector where developers have seen fit to suspend projects because of the uncertainty of being able to close, let's say, on condos. People were not as able to go to sales centers. And as a result, some of those have been put on pause. I should say, though, that, as a counterpoint, a lot of the planning work related to that is still going on because most of our developers are looking beyond the next 12 months and looking at what the demands will be beyond that. So we're still continuing with the planning work. The -- we have had a few projects that have been canceled, but nothing that has been very material.

Certainly, in the public sector, almost everything is going forward, especially in the public transit realm and in health care and -- because they are considered essential services.

Where we found the greatest difficulty, especially in the government sector, was the lack of government to be able to adjust quickly to the approval process when everybody was accustomed to working in the offices. And so there was a very significant period of pause where governments and their whole process around how do they continue to process applications and such. The governments do seem to be working through that process at the moment and adapting to the technology that allows change.

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Operator [24]

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Your next question comes from Maxim Sytchev of National Bank Financial.

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Maxim Sytchev, National Bank Financial, Inc., Research Division - MD & AEC-Sector Analyst [25]

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Quick question for you as a follow-up on Alberta. I think your Western Canadian exposure is roughly 20% of revenue. Do you mind specifying a bit more in terms of what is the exposure for Alberta?

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Stephen B. Taylor, IBI Group Inc. - CFO [26]

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So Max, it's not all of Alberta. Obviously, Fort McMurray continues to be -- it's always been a very small operation for us, but it, between fires and floods, continues to be a challenging marketplace. In Northern Alberta, we are -- that is primarily where we're seeing the slowdown in terms of civil engineering work. The Calgary marketplace, we haven't seen any decline in business operations. But it's northern Alberta that is the marketplace that has changed over the last -- really over the last month or the last 45 days.

One thing that we hadn't commented on that on the residential marketplace, though, is we are seeing across the board, the continuing trend of developers moving into rental accommodation, planning, designing, rental accommodation. And -- so we're not seeing a great decline in condominiums, but we are seeing an increase in the amount of work that's coming in from clients that want to do projects in the rental space.

And those -- the planning and the horizon for those types of projects tends to be a lot longer term. So the major funds that are investing in that kind of work are looking at, okay, what are the trends? What are the demographics likely to be over the next 5 to 10 years and building to address need now as opposed to the sort of boom and bust marketplace that condominiums and other real estate markets can hold.

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Scott E. Stewart, IBI Group Inc. - CEO & Director [27]

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Just maybe a further comment on that is that some of the major players in the rental market and what they build and own, operate things for a long period of time, also see this as an opportunity. Because they're looking to -- because they are in it for the longer term, they do have significantly deep pockets. And are looking to pick up maybe some price-sensitive opportunities and even expand their portfolios of development.

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Stephen B. Taylor, IBI Group Inc. - CFO [28]

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Yes. Some of the developers are looking at this slowdown at the moment as an opportunity. Because one of the challenges that they've been facing over the last 2 years has been rapidly escalating construction costs. So for guys who are making longer-term investments in the rental property market, any perception that construction costs are going to be coming down somewhat. It's really motivating them to accelerate the pace of doing projects.

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Maxim Sytchev, National Bank Financial, Inc., Research Division - MD & AEC-Sector Analyst [29]

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Okay. That's interesting. I don't know if you can quantify this at this moment. But is it possible that the rental kind of momentum can offset the decline in condos? So the revenue generation overall is sort of flattish in architecture and engineering in relation to residential market? Or is that too optimistic of a statement?

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Stephen B. Taylor, IBI Group Inc. - CFO [30]

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What we're seeing is that the 2 are at least equal and offsetting at the moment. So we're not seeing a significant deterioration in the condo market but we are seeing there's increase in trends towards further increases in the rental space going forward.

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Maxim Sytchev, National Bank Financial, Inc., Research Division - MD & AEC-Sector Analyst [31]

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Okay. Very helpful. Steve, do you mind maybe commenting on accounts receivables and kind of collections that you have been seeing so far in April, any deviations from the typical trends?

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Stephen B. Taylor, IBI Group Inc. - CFO [32]

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It was quite encouraging that we actually had a very good cash month in April. We had a good cash month in March and a good cash month in April. So it wasn't quite as outstanding as we really had an extraordinary month in December of last year, which kind of pushed balance sheet values down a little bit more than we would normally see. But we're obviously -- we watch cash every single day. And we are seeing continuing robustness in our collection efforts.

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Maxim Sytchev, National Bank Financial, Inc., Research Division - MD & AEC-Sector Analyst [33]

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Okay. That's very helpful. And then I think it's very helpful, obviously, that you guys are starting to disclose the SaaS-type revenue. I'm wondering if you can maybe talk about sort of the longer-term aspirations around where you could get it as, I don't know, a percentage of your Intelligence practice or overall top line? Maybe any color there.

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Scott E. Stewart, IBI Group Inc. - CEO & Director [34]

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Yes. Certainly, in every one of our new products, that some of them we've launched and some are in development, we do a full business plan that rolls out over a number of years based on what value, see revenue generation on a client basis and the growth in the market. It's highly uncertain, though, as we are making investments in the early years, like in the TravelIQ platform, and -- but it's also been based on the growth rates. And in a lot of these areas, we really don't have much history in terms of the -- what the growth rates might be in the pickup.

The -- one of the best examples is, though, is our TravelIQ platform, where we have now some 12 clients that I mentioned earlier. And we see that every state, every province, every city, every community becomes a new client. It's really been a function of how quickly can we secure those clients. It's a new business. We're creating a market that doesn't exist. So there's a lot of uncertainty about it, Max, at one level. But I would -- to maybe provide a bit of context.

Within our Intelligence practice, we have 3 areas of revenue. One is consulting, consulting and planning and design and implementation of systems. The second area is the solutions actually delivering the service. Either by way of special integration of software and hardware or the software as a service model. And then the third is operations where we're actually operating some of the systems that we have deployed our systems that others have implemented.

At the moment, our solutions practice is about 1/3 of our Intelligence practice. And that's the area where we see that there is an opportunity then to provide more of the software as a solution platform and to be able to grow that at accelerated rates because of, a, the ability to execute quickly. So instead of it being a customized software that would be delivering over many months or a year or 2, it becomes software as a solution where we can figure the client in a matter of weeks. And because it's a common platform, the margins are quite significant.

I would say that -- and again, as some context, that we had indicated that we wanted our overall Intelligence practice to be at 20% of our revenue from the firm by the end of this year and to have a margin that is in the order of 20%. Going out another 5 years, we really don't have a full forecast other than probably the base from my perspective would be that the base would be continuing at the current rate, and by an objective to exceed that. And these are the formative periods that we're watching closely to see what that ultimate growth rate might be.

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Maxim Sytchev, National Bank Financial, Inc., Research Division - MD & AEC-Sector Analyst [35]

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Okay. That's very helpful. And I just want to clarify one thing on sort of the SaaS solutions for toll roads. Correct me, if I'm wrong, but if the volume for a given client in terms of traffic right now falls, there's no implication for you guys, right? I mean, people are going to be paying for that software kind of regardless. Is that the way we should be thinking about this?

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Scott E. Stewart, IBI Group Inc. - CEO & Director [36]

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That is the way you should be thinking about it, correct.

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Operator [37]

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Your next question comes, again, from Mona Nazir of Laurentian Bank.

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Mona Nazir, Laurentian Bank Securities, Inc., Research Division - Director of Research and Transportation & Infrastructure Analyst [38]

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Just a quick follow-up. I was wondering if you could provide a mix of public versus private exposure for the major geographic areas, the U.S., Canada and internationally.

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Stephen B. Taylor, IBI Group Inc. - CFO [39]

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So Mona, I can't say overall, and it gets a bit muddy because you have to pick a position on whether the big P3 projects are public or private. But basically, at the moment, we are at about 35% of privately funded -- private sector funding projects and about 65% publicly funded. So through some form of local, municipal, state, provincial, federal governments. I don't have the breakdown by geographies, but those are -- that's basically where we are overall.

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Operator [40]

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There are no further questions. You may proceed.

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Stephen J. Jones, Covanta Holding Corporation - President, CEO & Director [41]

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Thank you, everyone, for joining us today. We appreciate you following IBI. We -- as indicated, we are very positive about the situation that we -- about the pivot of IBI to become a technology-driven design firm. And what COVID-19 has done is to further illustrate the logic and the insights of that approach. So everyone, have a very good weekend, and stay safe. Thank you.

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Operator [42]

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Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.