Enterra Holdings Ltd. (WSP) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for standing by. [Operator Instructions] I would now like to turn the meeting over to Mr. Quentin Weber, Investor Relations. [Foreign Language]. Please go ahead, Mr. Weber.

Thank you, and thanks to everyone for joining us today for a very special call and webcast presentation regarding the announcement we made earlier today related to WSP's acquisition of Golder. With us today are Alex L'Heureux, our President and CEO; and Alain Michaud, our CFO. This call is being recorded live and it's being broadcasted on our website. The accompanying slides that we will be referring to the call are also available for download on our website. I would also like to invite you to view our video outlining our view for this acquisition of Golder. It's right on the visual platforms that you can see. Before I hand over to Alex to discuss the announcements, I would like to point out that some statements made during this call will be forward-looking. Actual reserves or events describing the statements may differ materially from those expressed or implied. We, at WSP, disclaim any intent to update or revise any of these forward-looking statements. Finally, the presentation is not intended to form the basis of any investment decision and does not claim to be comprehensive or to contain all the information that the recipients may need to evaluate the securities of WSP. No representation of warranty is expressed or implied is given and so far is permitted by law and no responsibility or liabilities accepted by any person with respect to the accuracy of completeness of the presentation or as content or any oral or written communication in connection with the transaction of the securities at WSP. With that, I would like to turn the call over to Alex L'Heureux.

Good morning, everyone, and thank you for joining us today. I am extremely proud to share exciting news with all of you. Today, we have reached another significant milestone by entering into an agreement to acquire Golder, a global consulting firm with over 60 years of experience in providing earth scientists and environmental consulting services, benefiting from an outstanding reputation as evidence by consistent ranking among the leaders in ENR's top 500 design firm list. Similar to the acquisition of WSP in 2012 and Parsons Brinkerhoff in 2014 and Golder marks another very exciting step in our journey to become the reference in our industry. We firmly believe that the future belongs to those firms with meaningful visions because their purpose is to make the world a better place. At WSP, it is our purpose to be future ready. Today's significant announcement allows us to make real and tangible impact with the scale that gives science unlimited potential to address the issues we face globally. Furthermore, it is our vision to bring real harmony to our world. This transaction allows us to accelerate our ESG vision, so that we can make an impact in our communities right now. With its cutting-edge expertise, its attractive business mix with strategic advisory services from pricing approximately 70% of its revenues and 80% of its business from recurrent long-term relationship with blue-chip Fortune 500 and government clients, Golder significantly accelerates our growth in the highly strategic and in-demand environment sector and will unlock, in our view, significant opportunities. To put things in perspective, our environment sector will represent approximately 25% or $2 billion of WSP total $8 billion pro forma net revenues achieving a key milestone in our 2021 global strategic plan. In addition, it immediately enhances our proportion of net revenues from strategic advisory services to approximately half of our total net revenues. As a result, our platform will now have 3 leading world-class franchises. With Transport & Infrastructure totaling 47% of our net revenues and coming second Environment at 25%, followed by Property & Building at 21%. Without a doubt, Golder represent another significant milestone in establishing WSP as a leading force in our industry. Alain will now cover key financial terms of the transaction.

Thank you, Alex, and good morning, everyone. Let's now move to key financial highlights on Slide 5 of the presentation. The transaction is based on an enterprise value of $1.5 billion, representing a multiple of approximately 10.4x Golder's pre-synergy trailing 12 months pre-IFRS adjusted EBITDA and 8.4x on a post-synergy basis. From a margin standpoint, Golder attractive margin profile will immediately increase our adjusted EBITDA margin before any synergies towards the higher end of our 2021 strategic ambition. We expect annual cost synergies of approximately $35 million to be achieved over a 24-month period with 50% to be realized within the first 12 months from the closing date. Integration costs required to realize such annual cost synergies are estimated at $35 million in the aggregate. The transaction will also be immediately accretive before any cost synergies to WSP's adjusted earnings per share, with accretion increasing to the mid-teens once synergies are fully realized. We intend to fund the acquisition with $310 million of private placement of subscription receipts with new strategic investors and $1.2 billion of underwritten term loans, pro forma net debt to LTM adjusted EBITDA, closing of the transaction is estimated to be 1.3 turn, remaining well within WSP's targeted leverage range of 1 to 2 turn. Moving to Slide 6. The transaction has been unanimously approved by the Board of Directors of both Golder and WSP and overwhelmingly supported by approximately 99% of Golder's partners, holding approximately 82.8% of the outstanding Golder shares. The transaction, which is expected to be completed through a plan of arrangement remains subject to certain customary closing conditions, including court approval and shareholder approval by not less than 75% of the votes cast by the shareholders as well as customary regulatory approval. The special meeting of Golder shareholders is expected to be held on January 13, 2021, closing is expected during the first half of the second quarter of 2021. On that, I will now turn it back to you, Alex.

Thank you, Alain. When we unveil our 2019-2021 strategic plan, as summarized on Slide 9 of the presentation, we set ambitious financial goals to deliver by the end of 2021. We targeted total net revenues between $8 billion and $9 billion, an EBITDA margin profile between 15% and 16%, always with the goal of maintaining a very strong balance sheet with net debt-to-EBITDA ratio between 1x and 2x. As we enter 2021, we are confident that our solid operating plan for the year combined with the successful closing of the Golder transaction, along with new long-term strategic investors, GIC and BCI, will position us well to achieve our 2021 strategic ambitions. And again, allow me to also reaffirm how pleased we are to welcome GIC and BCI as new strategic investors alongside the Caisse de depot et placement du Quebec and CPPIB. The ongoing vote of confidence from our strategic investors is instrumental to our continued success in the execution of our strategy. With this combination, we will now have a contingent of 54,000 passionate and talented employees including 14,000 earth and scientists and environmental consulting experts with unrivaled environmental, social and governance expertise armed with the mission to meaningfully contribute to the world screen transition. And this transaction was significantly boost our presence and capabilities in key high-performing industries supported by a highly complementary and diversified customer base, including, but not limited to, government, technology, manufacturing, power, and resource sectors across key geographies, including the Americas, Australia and Europe. Turning to Slide 10. The WSP's attraction to Golder originates from a deep respect and appreciation of its legacy, reputation and brand. Both firms share a like-minded vision of the sector similar guiding principles and cultures and our focus on strategic consulting, including our core belief that our technically driven client services mindset will continue to contribute to strategic growth and value creation for all of our stakeholders. Turning to Slide 11 and 12. We believe the timing is absolutely right for this combination. As in the past, taking informed risks and being opportunistic is, in our opinion, the right approach to create value for WSP shareholders. We believe WSP must lead by example, and we also believe that organizations are likely to be more resilient in the face of an expected shock and hardships if they are managed for the long-term and in line with societal mega trends, such as diversity and climate change. We also believe the estimated $10 trillion in global COVID-19 stimulus would be pivotal for the world's low carbon position. This includes the incoming U.S. administration climate agenda to achieve economy wide net 0 emissions by 2050. Heightening public corporate and financial awareness for ESG matters is here to stay, and recent studies have shown a strong correlation between ESG and greater equity returns. In the resource and energy sectors, WSP and Golder's combined expertise will also be a strong force in assisting clients around the world in the rehabilitation of their sites and the achievement of their green transition agenda. Moving to Page 14 of the investor presentation. Let me give you a few examples of why creating the leader in the sector is strategic to WSP. Mega trends are rapidly taking shape, and they are impacting our world and our industries. The political dialogue is changing with a renewed momentum. For example, the human population in our cities are growing relentlessly. And by 2030, will be 6 new 10 million plus people mega cities, nearly 20% more than the 33 that currently exists. The addition of 2 billion people to the global population over the next 30 years will ramp up demand for vital human needs, such as food, water, housing and infrastructure and will be set against increasing resource scarcity. The Earth's ability to meet this demand would be tested to its capacity. This, combined with the use of the planet's precious resources and the biodiversity we have lost exacerbate the need for expertise in the sector. It's also an appreciation that underlines the precarious position of much of our remaining natural capital. In parallel, there is a deepening climate crisis. The need to decarbonize and create a more sustainable environment has never been greater. The next decade will be critical if we are to achieve our global goal of net zero-emission by 2050. In many ways, the rapidly growing ESG trends encapsulate all of the above and provide the narrative by which business communities must address the challenges ahead. Businesses need to demonstrate good corporate citizenship because stakeholder focused firm that have adopted the principle of ESG perform better. They are run more efficiently, more easily to attract top talents, a stronger balance sheet and are more resilient. Increasingly, all that resource consume, build and utilize is being measured and recalibrated in ESG terms. The ability to pay a real part in tackling these challenges is what makes the timing of this acquisition so important. Against the backdrop of these macro trends, the global company needs environmental stewards with the breadth and the depth of expertise in the global scale and the drive to stare us to a greener, more sustainable future. In other words, the climate needs science-based solutions from scientists. Population growth means engineered answers from engineers, and that is exactly what WSP has to offer. Solving complex challenges and safeguarding communities with science-based and technical solution is what Golder is known for. Made possible by conscious contribution from their experts around the world. Scientists, consultants, engineers, each of them enjoying the distinction of being recognized as world-class earth scientists and environment experts. Together with WSP, this global reach will be amplified and expanded. Building on a world-class ESG advisory firm by combining the talent pool of Golder and WSP, enables us to take the leading role in the UN Decade of Action and beyond. Now turning to Slide 15, 16 and 17. We have always been very clear about our ambition to become the leading global environmental firm, and we are very proud of the prospect of reaching that ambition by combining Golden WSP along with numerous, recently completed strategic acquisitions. Given Golder's position of the preeminent consultant in Earth sciences and environmental services, this acquisition secures our market leadership in core service areas that will be critical to the past ahead. Specialized services, including climate change, impact assessment, Earth sciences and mining environmental solution will expand the service offering to our clients and give them access to the full range of advisory and technical skill set from the field, right up to the C-suite. As we stated in our 2019-2021 strategic plan, now is the time to be future ready. WSP has demonstrated that determination time and time again with our market pioneering commitments. WSP was the first professional services firm to sign a sustainability-linked syndicated credit facility in the Americas. In Europe, WSP cofounded the pledge to net 0 initiatives for the environmental industry, amongst others, and WSP is a signatory to the UN Global Compact. Environmental stewardship is in the DNA of both of our firms. Our missions and values are well aligned. And now as we enter the one's decade of action, we have the ambition to own this space. We want to formulate the message, and we want to enable our clients to meet their sustainability obligation by 2030 and beyond. What if we combine the best minds with the boldest opportunities? What if we redefine the new standard in a key future? What if we let scientists create the solutions we need? The combination of Golder and WSP is a compelling answer to many of these aspirations. Thank you very much. And I would now like to open the line for questions.

[Operator Instructions] [Foreign Language] Your first question comes from the line of Mona Nazir of Laurentian Bank.

Congratulations. So firstly, just wondering if you could discuss how the acquisition transpired and over what time frame? Were they on your list of potential targets? Or are they perhaps looking to sell and there was some motivation on both sides?

That's a great question, Mona. I mean, the best deals that we completed in our history are the deals that we nurtured over time. We've developed and we have a long-lasting relationship with Golder, starting with our employees and their professionals. We've been working for Golder for as long as we remember. And the collaboration with the 2 firms has been in existence for a very, very long period of time. These were bilateral discussions over a number of years. This -- the discussion did not start 3, 4 weeks ago or 3 months ago. We've had and I have had the pleasure of interacting and having discussions with the CEO and the leadership team of Golder for many years. But starting in the fall, we engage in a number of more serious discussions. And we felt for the reasons that I just explained in my address that the timing was right for those 2 great firms to come together. And I'm extremely proud to see the support that we've received from the partners at Golder. So very exciting time and an amazing milestone for the company today.

Perfect. That's great information. And just when I'm looking at the composition of Golder and the mix on a geographic basis, it's a very strong margin profile. But I'm just wondering if you could speak to where the synergies are expected to come from? Would it be fair to say given APAC has a lower margin profile perhaps that offers a lower hanging fruit? But just to give some more detail and confirmation that all synergies are cost related.

Yes. Actually, it's the other way around. I mean the way we're thinking about this transaction Mona is that, this is not a cost synergy play. Of course, in any 2 firms coming together there's always some synergies and cost synergies to generate. But where I see the biggest potential, and we have not included this in any of our forecast and modeling, it's on the revenue synergy front. Golder, the composite and that the client mix of Golder is essentially or approximately 80% private and 20% public. And I see humongous opportunities on the public side to bring and to leverage Golder's expertise with our public sector clients. And conversely, I'm going to give you an example because you talked about Australia, Golder is obviously in trench and a strong relationship with the Department of Defense and is a big player with the Department of Defense of Australia. Together, I think we're going to be able to increase and expand the scope of services that we can offer. But we're also going to be able to essentially hopefully take the #1 position this time. We do some more WSP with the Department of Defense, but Golder's is doing a lot more. And we believe together, for instance, we're going to be able to create a great amount of revenue synergies with the clients like the Department of Defense in Australia. You talked about being a North American-centric firm. It's true that Golder's a strong presence in Canada and in the U.S. but do not forget that 17% of top line is generated almost essentially in Australia. So Golder is indeed on the earth and science and environmental side, a very large player in Australia. So together, I believe it's just filling a huge gap that we had at WSP to really raise the bar on strategic advisory and environmental services in Australia. So all in all, I think it fills many, many gaps for us.

That's great. And just lastly, in your quest to be a leading firm in the Environmental segment and related ESG presence. Does this acquisition tick all of the boxes for you? I do understand that the target is continuously moving. And the goal today is quite different than perhaps 2 years ago?

Yes. No, it's definitely checking all of the boxes. You can always do more. You can always improve, but now we have on the environmental side and consulting side, I think we have probably the most, if not the most, diversified client base of any. In our industry and outside our industry, and I include all of other professional services firm in any industry, full stop. We access to Fortune 500 clients. We have access to the public sector clients. So I do feel that in the same way, Parsons Brinckerhoff was taking us and propelling us in all different places from a Transportation point of view and WSP 2012 on the Property & Building sector. Golder is essentially propelling us in a complete different stratosphere essentially from an earth and sciences and Environmental point of view.

Your next question comes from Michael Tupholme of TD Securities.

First off, congratulations to Alex, and everyone else. So first question, Alex, just relates to the integration process. Wondering if you can talk a little bit about how you see that process unfolding, including any different approaches or special steps that you think you may need to take given the ongoing challenges created by COVID-19?

Yes. Well, the first point is, in recent months and years, I've been talking about the various criteria that we follow when we complete the transaction. And if you recall, I gave 4 different criteria. And I said, first of all, is their strategic imperative, to do this deal. And in this case, I think without a doubt, there was, for us, a strategic imperative to complete the transaction with a firm like Golder. That's the plan that we had in vail at the end of '18, beginning of '19. The second one is, can we agree on price? And is the transaction accretive day 1 for WSP and our shareholders. And definitely, we are extremely pleased with the transaction terms and the way we work the transaction with Golder's partners and the management team. The third one is the culture right, and I mentioned it in my address earlier on. We share a like-minded vision. We understand what we wish to accomplish and the role that we want to play as a firm in our industry but outside and also in our local communities. So that is a natural, and we're fitting that box too. And the last one is can you integrate it. And then you have 99% the partners voting in favor of this transaction, and this is a firm that was -- had been independent for 60 years, but they're seeing the vision, they're seeing the mission, and we understand that together we'll be stronger. That's a very good start when we wish to integrate a company. And obviously, I will be taking the time once we close the transaction to explain our vision, to extend our mission, to expand the direction of want to take together as the leading firm, the leading global environmental firm, in the reference in our industry, but also to make sure that we continue to be inclusive. I said earlier on to Mona, that there's very little duplication in the client base. And that's also always an amazing start. When there are no duplication with our client-facing people, that makes the integration that much easier. So I do not expect a difficult time. And I believe that the leaders of Golder's will play an active role in development of the company. And I think we'll assess it once the closing is done, but what the period between announcement and closing allow us to do is to get ready to action as soon as the transaction is closed. So a very exciting time. And given that we have strong operational hubs, in the markets where Golder is a strong player. I think that will make it that easier to integrate.

Okay. No, I appreciate that. Second question. Can you talk about Golder's historical growth trends, where that growth come from? And then also if possible to address how the business has performed over the course of calendar 2020 in view of the global economic challenges?

Yes, the company was quite resilient, actually in 2020. Did very well. Maintain its margin profile. The backlog was fairly strong. And over the last 4, 5 years, this is a company that has grown year-over-year organically. And in many instances, with global clients, a double-digit organic growth rate. On the aggregate, it was not always double digit, of course. But this is a company that year-over-year for the last 5 years has been growing. And this is -- obviously, this was a positive sign for us at WSP.

Okay. And I mean, just looking at the business going forward, if we think about stand-alone Golder before considering cross-selling opportunities, which it certainly sounds like there are some there as well. But on a stand-alone basis, is that the sort of growth -- that type of growth that you just mentioned that they've seen historically that we could expect going forward given the positives in the environmental sector?

Well, certainly, the underlying trends are there, right. So that's, again, a good starting point. We just announced this morning, is going to give us a bit of time to get back to you and start giving you some forecasted numbers and getting to spend some quality time together. Before we can provide you with more certainty around the future. But look, on a stand-alone basis, clearly Golder was operating in an upward trajectory industry and work, and they were really in the right market, and we believe WSP and also our environmental sector for the past few years was our the market that was growing the fastest. So and certainly in 2020, it was the case again. So I don't have -- I'm not ready and to make prediction just yet. But certainly, I think we showed that we're buying a company that is a very new right market right now.

Your next question comes from Benoit Poirier of Desjardin bank.

Yes, Alex, Alain, congratulations again for the very nice transaction. Could you maybe talk a little bit about the seasonality of Golder, whether it's similar to double GSP when we look at the first half, second half or Q1, Q4?

Very -- that's very simple answer, Benoit. Very, very, similar.

Okay. Okay. That's great. And with respect to your backlog, could you comment about the backlog that will be brought to WSP? And whether the visibility is similar in terms of number of months in conversion to WSP?

Yes. This is a conversion of months. I mean, it's also similar. It's around 12 months, if my memory is not failing me. So -- And if it's any different than what I just said, I think I could take it offline with you, but it's around 12 months, and it's a very strong backlog. It's a good backlog. Of course, I don't know what 2021, 2022, 2023 will look like, as we know today. But the reason why we think that the timing is right. There's a new U.S. administration with the balance of power over there, there's renewed momentum around climate change. And again, I think the mindset of the corporate world is also changing very rapidly. And actually, I would say it's changed dramatically already since we unveil a strategy at the end of '18, beginning of '19. It's just accelerating. So we believe that the current Environment is quite pertinent to our desire to do a deal with Golder.

Your next question comes from Devin Dodge of BMO Capital Market.

I know you classified Golder's revenues is roughly evenly split between environmental advisory in our sciences. But we look at the revenue breakdown in ENR. Industrial and petroleum and hazardous wastes that are sort of Golder's largest verticals. Just can you help us better understand their end market focus?

Yes. Well, ENR is a great publication in that space. And so is environmental analysts and furthers in the space. And on Page 14 of our presentation, we've used some of that data to try to provide you the lay of the land when you exclude water. Which, in my opinion, you should be excluding when you look at the total revenue that we will be generating as a combined firm and the leadership position that we've acquired with this transaction. To answer your question more specifically around advisory, Golder is providing advisory services across all segments and more specifically to your question around mining and resources, on a combined basis. Still, today, oil and gas and the mining sector would represent less than 5% of our combined revenue on a pro forma basis or about. So we believe that if you want to be an actor and the leading actor in their revisitation and the green transition agenda, and if you want to be a leading player on the ESG front, you can't ignore the resource in each sector, you need to be able to be there for those clients and assist them and their green transition agenda. So I just believe that this is a great opportunity for us to assist those clients in the years to come. And there will be a ton of opportunity to assist them and the rehabilitation of operating sites from an advisory point of view. So I think this is positive.

Okay. That makes sense. So after the deal, you mentioned your leverage is going to be around 1.3x, it's still below the midpoint of the target range. I think even if you entirely self-funded the deal, leverage would have been only slightly above that midpoint. Should we interpret this to mean that you could still be active in your M&A efforts? And if so, I guess, what sectors or regions do you expect to be focusing on going forward?

Yes. I think today, we should celebrate the combination of Golder and WSP together. But at the same time, and by saying, it's okay, my answer to your question, would be that it's part of our DNA. Since our IPO that, that's what we've done, that's what we're known for. We always develop thoughtfully our strategy and our strategic cycle, and we stick to it. And this time around is not any different. This is a significant milestone for us. We wanted to take a big step and take a leadership growth in the environmental consulting space. And I think we're achieving that with this transaction. Now we are welcoming to very sophisticated, high-quality strategic investors joining our rank. This was, by the way, done in collaboration with the Cassie de depot and CPPIB, and we purposely choose to do it this way. Because we want to maintain our firepower. And if any, we want to increase our firepower for years to come and to be in a position to have BCI and GIC joining our rank. I mean makes us very happy. We have a very strong balance sheet. We are in the process of developing our operating plan for 2021 and more to report in due course around our plan for the years to come.

Congrats on the acquisition. It looks like a pretty interesting deal.

Our next question comes from Sabahat Khan of RBC Capital Market.

Great. Maybe share just a little bit of color on their private versus public mix, you indicated it's about 80% private. Is that just the nature of the work that Golder was undertaking? Maybe what led to a bit more private mix historically for those guys?

No. I think that 80%-20% is just the -- I mean, they work, as I said before, I mean, the client -- the Golder's client list is very impressive. They work with I wouldn't venture in saying they work with every single Fortune 500 client, but they do work with a significant portion of them. And that's historically their DNA and what they've been doing over time. They did increase over time, their exposure to the public sector, and they do work with governments, and I talked about the Department of Defense in Australia. That would be a good example. They work in Canada. With the various Department of Transportation. But I think this is a real opportunity for us to leverage the work that we do. And how we do it in the various parts of the world and bring their expertise alongside us.

Okay. And then if we shared a little bit of color earlier on the revenue synergies and opportunity there. I guess, when you think about the revenue synergy, does it -- looking at Golder's geographic mix, maybe more in the Americas, I guess, is there a region that you're more focused on? Is it just, I guess, public sector clients across reginal markets, how should we think specifically about what top of mind or focus for you to expand their revenue?

Look, we -- our strategy has always been and will always be. We want to be the leading firm and the reference in OECD countries, and that's not going to change. That doesn't mean that we're not working in countries outside of the OECD space. But I think as a general statement, we want to be the reference in those countries. So clearly, we're going to continue to make a large push in Australia, we're going to continue to focus in the U.S. Today, we've acquired a solid, very solid position in Canada with our expertise and what Golder is bringing to the table. In Europe, and I haven't talked about Europe, but the combination of Golder in the Nordics is only increasing an already strong position in the Nordic countries. So I think that that's the reason why we believe Golder was so compelling. They are a strong force in the countries where we operate.

The next question comes from Chris Murray of ATV Capital markets.

Congratulations. Just more quick questions about the transaction close. I guess, first of all, you mentioned the fact you've got, I guess, a lock up agreements with 99% of the Golder's senior employees. That represents, I guess, least according to the press release that you guys put out, at about 83%. The other remaining shareholders, is that in a block or is that well diversified? And have you been able to talk to those shareholders at all?

It is well diversified. But pre-announcement, we were not in a position, actually, the strategy was not to reach out to all of the shareholders. We wanted to reach out to the partners. And the partners, 813, if my memory is not failing me, all essentially 83% of the company. And it was important for us to get a sense as to whether they would be in favor of such transaction. And that's the reason why we brought the NIM under the tent in a very creative way without getting into too much detail to really get a sense of whether they would buy to a transaction and a combination of WSP and Golder. And I mean, the results are there and they speaks for themselves. I mean they were all in favor of joining WSP and create something special between the 2 fronts.

Okay. That's great. And then you did mention that you may need some regulatory approvals. Is there anything unusual or any particular jurisdictions where this will require some sort of funnel review like an HSR or antitrust approval?

Yes, typical antitrust approval process that we're going to have to go through. I mean, obviously, it's something that is a hurdle that we're going to have gross, but we crossed it many times in the past with PB, with WSP, with Berger, with Opus with -- so it's something that we're going to have to go through.

Okay. And then I guess my last question, just thinking about the opportunities for strategic investors. Can you maybe give us some more indication or some color about how they came to be part of this transaction?

Look, like everything, WSP does, and I do personally is that we build a relationship. And our relationship with GIC has not started 3 months ago. We've been in discussion with GIC for years. And so it's the same thing with BCI. We've -- over time, we had the opportunity to develop a relationship with those 2 strategic investors. And obviously, when we thought that a transaction between Golder and WSP could be possible. We entertained discussions, also in collaboration with the CPPIB and the cast about the prospect of bringing them in. And again, always with the long-term future of the company in mind. We believe that we have long-term plans for the company. We don't want to stop here. I think we have a long way to go to transform and to continue to propel the company and the mission division that we have. And we believe that welcoming 2 new partners was probably the right time to do this.

Okay, fair enough. And then just mechanical question. Have they given you any indication of whether or not that could be taking your dividend as part of the DRIP program or taking in cash?

They will be dripping. It will be tripping.

Our next question comes from Dimitry Khmelnitsky of Veritas.

So the first question, just to confirm, you mentioned that revenues and EBITDA from Golder on TTM basis. This is TTM ends in Q3 fiscal '20?

Yes.

Got it. Okay. Beautiful. Can you please indicate the impact of IFRS 16 on Golder's EBITDA?

Yes. Look, I mean, the assumptions and the hypothesis you should be taking around IFRS 16. And if you look at the breakdown for WSP and the pre- and post-IFRS 16, I'd say, would be a fair assumption to you some similar at this point in plan for Golder. I don't believe that far off.

Got it. And this question has been up, but I wonder if you can maybe expand on that a little bit. And that is the impact on -- of COVID on Golder's revenue year-to-date? And I guess, particularly maybe Q2 and Q3, if you may?

Yes. Well, Golder performed very well this year. In the context of the COVID environment. Obviously, this was worldwide. This impacted everybody in every country, but we came were quite impressed with the way they were able to maintain their margin profile and continue to win work and to perform as a company over the course of the first 3 quarters.

Okay. And the -- can you indicate the percentage of Golder's revenue that are derived from mining and oil and gas, you indicated a rough proportion on a consolidated pro forma basis, but just specifically to Golder?

Yes. It's around 15%, which would be related to the resource sector and above 20% for around the mining sector. So on a pro forma basis, it would be below 5%. And again, what you need -- and this is a very good question, and I'm pleased that somebody asked that question. We're not necessarily talking about engineering work. We're talking about advisory work. Assisting those clients and the OpEx and the costs associated with the running of their operation. So I think that we be in a position to assist this list of clients, I think this is a tremendous opportunity for years to come for Golder and for the company on a combined basis.

Right. Yes. And so that touches on the next question that I wanted to ask. And there is -- is that based -- on your expectation, is that a revenue from mining and oil and gas? Is it indirectly affected by changes in commodity prices or it's agnostic decision environment?

I would answer this by using a different word. It's quite resilient. Given the high expertise and the deep skill set that this company has, and access to the top-quality clients around the world, Golder has always been in a position -- and I mentioned that, I believe, in my address, but the margin profile and the operating margin of Golder is higher at this point than WSP. So they have been given the sheer expertise that are able to provide to clients. We have been able to maintain, if not improve our margin profile throughout time. So this is quite impressive.

Right. Okay. Perfect. And then you mentioned the Biden Green Deal potentially contributing to seen for growth in environmental spending. And cutting the carbon footprint. So Biden doesn't have the control of the sense. And so there is Republican control and it's unclear whether Republicans would at all cooperate on the Green new Deal. So I'm just wondering if the Green Deal doesn't go ahead. Does that -- and also, by the way, keeping in mind the fact that OECD governments are running very significant deficit as a result of COVID assistance and support programs. With that effect, in your opinion, revenue growth trajectory of Golder. If the Green Deal doesn't go through and given the government deficits.

Well, my answer to that is there were no Green Deals in the last 4 years in the U.S. and it preclude -- it certainly did not preclude Golder to grow as a firm. And the reality is the world is changing, there's this momentum. And I think I mentioned it earlier on, when we unveil our strategy in 2008, 2009, we saw something but that's something is even bigger, 2, 3 years later. So I think the fundamental trend or the underlying trend and the megatrends are there and there not going to change. So I think we are entering the market with tremendous opportunities for growth in years and years to come. And I think, as I said before, you asked about mining and oil and gas, I think there is a tremendous opportunity for an adviser like WSP Golder to assist this industry and the green transition agenda. Somebody is going to have to assist them. And I think we are uniquely position to play a leading role in that.

Yes, absolutely. And the last question, if I may, is why does the CDPQ and CPPIB did not participate in this route -- in this round of private placement, they do participated in the last round and they obviously already on meaningful position in the company. But I wonder why didn't they participate this time around?

Well, first and foremost, you will recall that we did complete the fund raise earlier this year, and they did participate with no-deal being... So this is a real testament of the support of our vision and company and the discussions that we've had with GIC and BCI, we're encouraged by CDPQ and CPPIB, and this was done in collaboration with our 2 long-term strategic investors. So it's a strategy to strengthen our balance sheet and a strategy to strengthen our investor base. And I'd like to thank personally and on behalf of the team and our Board, the support that we have from the CPPIB in that regard and how they have been an incredible support and also help throughout all of those times and all those years. So I wouldn't read anything into this other than it was a strategic move to expand our strategic investor base.

Your next question comes from Frederic Bastien of Raymond James.

Guys, kudos to you, Alex, Alain and the rest of the team for nurturing what looked like -- seemed to be a very long relationship and getting this deal past the goal post that you did it again. And I think you managed to exceed your strategic ambition. But more importantly for me, you're achieving that without really creating any significant discipline overlap across the organization. That's, I think, for me, that's the key takeaway. Anyway, onto questions, a lot of them have been already asked, but you provided some good background information on the relationship with both GIC and BCI, but I just want to make sure I heard you right, Alex. Have these institutions expressed a desire to continue supporting and potentially increase their ownership in WSP for down the road?

Yes, answer is, yes. And by the way, it's true for the case in CPPIB.

And your next question comes from Michael Tupholme of TD Securities.

Alex, I know earlier you mentioned that this transaction is not about cost synergies. But you did indicate that you do expect about $35 million of cost synergies. I'm just wondering if you can provide a little bit of detail into where you'd expect those cost synergies to come from?

Yes. Well, the message is for you, but it's also for Golder's employees and our own employees. This is a revenue synergy transaction. There are very little, if not any overlap on the client base on the expertise. And I want our employees and Golder's employees to hear that this is -- they are coming together, our firms that will complement the expertise and expand the level of services that we can offer in every segment of the business in which we evolve and operate. But like any deal, Michael, there's always some back office synergies around systems, insurance, around professional fees around streamlining the operation. But it's not about the client-facing activities to the contrary. We're coming together because we believe we can do more together. And that's the storyline on this deal.

There are no further questions at this time. I'll turn the call back over to the presenter.

So thank you very much for attending this call on such a short notice. WSP is tremendously excited about this transaction. And we look at forward to -- as we progress in the year and in the following quarters. So thank you very much, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. [Foreign Language]