Good morning, ladies and gentlemen, and welcome to the GDI Integrated Facility Services Inc second quarter 2022 results conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require any assistance, please press star zero for the operator. Also note that the call is being recorded on Monday, August 8, 2022. I would like to turn the conference over to Stéphane Lavigne. Thank you, Prada. Bon matin à tous. Good morning all, and welcome to GDI's conference call to discuss our results for the second quarter of fiscal 2022. My name is Stéphane Lavigne. I'm Senior Vice President and Chief Financial Officer of GDI. I am with Claude Bigras, President and CEO of GDI, and David Hinchey, Executive Vice President of Corporate Development. Before 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 in the MD&A file on SEDAR at the end of last week. I will begin the call with an overview of GDI financial results for the second quarter, and will then invite Claude to provide his comments on the business. In the second quarter, GDI recorded revenue of CAD 526 million, an increase of CAD 154 million or 41% over Q2 of last year, including organic growth of 11% and growth from acquisition of 29%. We recorded an adjusted EBITDA of CAD 37 million in the quarter, an increase of CAD 4 million or 12% over Q2 of last year. On a year-to-date basis, revenue increased by CAD 265 million or 35% to reach over CAD 1 billion compared to CAD 756 million last year. Organic growth was 7% year-over-year, and revenue growth from acquisitions was 27%. Adjusted EBITDA in the first half amounted to CAD 73 million, an increase of CAD 6 million or 9% over the corresponding period of 2021. Moving now to our business segments. Our Janitorial Canada business segment recorded revenue of CAD 145 million in Q2, an increase of CAD 19 million or 15% compared to the second quarter of 2021, which was mainly generated organically. The segment reported an adjusted EBITDA of CAD 19 million compared to CAD 18 million in the second quarter of 2021, an increase of CAD 1 million. Our Janitorial USA business segment recorded revenue of CAD 164 million in Q2, an increase of CAD 89 million compared to Q2 of 2021 due to the combined effect of the IH acquisition and organic growth of 12%. Adjusted EBITDA increased by 86% to CAD 13 million compared to CAD 7 million in the second quarter of 2021, primarily due to the IH acquisition. Our Technical Services segment recorded revenue of CAD 199 million, organic growth of 24% over Q2 of 2021, with 15% generated from acquisition and 8% from organic revenue growth. This segment recorded adjusted EBITDA of CAD 8 million, which was lower when compared to Q2 of 2021, which was unusually high due to the positive COVID-19 impact. Historically, the first half of the year in the Technical Services segment is seasonally slower, and the business ramps up as the year progresses. Finally, our complementary service segment reported revenue of CAD 25 million and adjusted EBITDA of CAD 1 million. This segment, which was negatively affected by low demand for daily consumables such as tissues, towels, and soaps, generated organic growth of 27% in Q2 of fiscal 2021. The majority of it was due to the GDI IFS business unit, which was launched at the beginning of 2022. I would like to turn the call now to Claude, who will provide further comments on GDI's performance during the quarter. Well, thank you very much, Stéphane. Bonjour. Merci. Bonjour à tous. Good day. I'd like to thank everyone on the line for participating in our earnings call for our second quarter of 2022 on a Monday morning. I'm pleased to report that GDI delivered another quarter of solid results with strong growth in both revenues and EBITDA. Overall, organic growth came in at 11% versus the corresponding quarter last year. That was at the height of the pandemic. We had higher occupancy rates in the Canadian office portfolio in the current quarter, and we generated also a healthy level of organic growth in our Janitorial USA business, Ainsworth, and our IFS businesses. Our Janitorial Canada business continued to perform well in the quarter, with occupancy rates beginning to rise in the office sector as employers roll out a variety of hybrid return-to-work policies. We have been working closely with our clients to modify our service offering to adapt to the gradual increase in occupancy rate. At the same time, we have been able to maintain a consistent level of cleanliness and workplace health in the different hybrid work environments we have been seeing. We expect to see a continuing increase in office occupancy rate in Canada as the year progresses. However, we do not expect occupancy rates to return to where they were prior to the pandemic, as hybrid work policy should have the effect of reducing population density in office building. We do not expect a lower office occupancy rate to have a negative impact on our business due to the higher service standards requirements. Outside of commercial office sector in markets such as manufacturing and distribution, education, healthcare, and retail, which represent the significant majority of our global janitorial business, occupancy rate did not fall for a sustained period during the pandemic, and as such, facilities in these markets are operating at levels comparable to pre-pandemic norms. Our Janitorial USA business had a very strong quarter, more than doubling its size with the acquisition of IH Services and posting 12% organic growth. Our partnership with IH is proving very positive. Both our teams are working well together, and we are actively collaborating on identifying revenue synergies with both new and existing clients. We received positive feedback from a number of IH clients on our new capabilities and enhanced geographic coverage that IH can now offer as part of the GDI family. Ainsworth, our Technical Services segment, also had a good quarter with 8% organic growth in 2024 Q2. The business was still negatively affected by supply chain challenges, which caused delays in closing out some projects. However, we have been seeing improvements in the supply chain at the end of the second quarter and entering into the third quarter, and we expect project execution to improve as the year progresses. The business continued to have a record backlog, and the outlook remained quite positive for the remainder of the year. Finally, our complementary segment delivered strong organic growth of 24% in the quarter. This was driven by the ramp-up of our first contract in our new IFS business unit, which was won at the beginning of 2022. I am pleased to announce that the IFS business won its second contract during Q2, which with a new client in the aerospace sector. I remain very positive on GDI business for the remainder of the year. All our business segments are focused on delivering strong results as office occupancy rates gradually rise in Canada as we capture growth opportunities in all our markets and from leveraging our partnership with IH Services. Ainsworth is typically seasonally strongest in the back half of the year, as Stéphane was mentioning, and it is entering its prime period with a commanding backlog. Our new IFS business has momentum and is growing its sales pipeline, and our manufacturing and distribution business is beginning to rebound as occupancy rates rises, and it's having success with its new polar industrial manufacturing operation in Kansas. Finally, our balance sheet continues to be strong with a bank covenant leverage ratio of below 2.5x, providing us with sufficient flexibility to execute on our strategic growth objectives. Thank you once again for participating in our earnings call. Operator, please feel free to open the lines to questions. Thank you. Thank you. Merci. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. If you would like to withdraw from the question queue, please press star followed by two. If you're using a speakerphone, we ask that you please lift the handset before pressing any keys. Please go ahead and press star one now if you have any questions. Your first question will be from Michael Doumet at Scotiabank. Please go ahead. Okay. Happy Monday, guys. Nice quarter. Good morning. Can you speak to the extent of the change in the revenue mix within Janitorial Canada? I mean, as far as regular cleaning versus specialty cleaning and, you know, how that compares to the mix in the U.S. and if you're seeing any sort of gradual rebalancing. Okay. Well, if we look at the difference, the fundamental difference between Janitorial USA and Canada is in Janitorial Canada, the occupancy is lower than in the U.S., and it generates a lot more, you know, significant amount of on-demand services, which is not as high as in the U.S. In Canada, you have a lower base revenue, a higher on-demand service level. In the U.S., it's the other way. You have a higher base revenue and a tighter demand for supplementary services. Now, what we're seeing is for sure the curve is changing. The curve is going back to a higher base as we go and the lower demand on normalized service. Mind you that the lower base growing is also inclusive of what we call that iTouch services that, you know, that somehow offsets the lower occupancy. As we see is base services will continue to grow, and our overall margins should be improved over the traditional margins for the business mix and the occupancy and the demand. That's really helpful. Thanks for breaking that down for us. On the labor inflation, you know, can you give us any sense for how that's trending, you know, whether it's ramping or flattening out? I wonder, you know, if your CBA means that labor inflation might be a little bit of a lag here in terms of when we see it. Lastly, if I can tack that on, you know, inflation pressures, how much of an impact has that been so far to your organic growth? Well, I will answer your question in three parts. Let's talk about labor. You know what? I think we're not giving you any news. I'm sorry. Labor, depending on the market, though, the labor challenge, I think a lot of businesses are facing it. I think the best approach that we have towards it is threefold, we are really focusing on recruitment strategies to attract people in our business segment. You know what? It's enhanced. We're putting a lot of energy and efforts into that front. Second, we're monitoring wages closely as we need to be, I would say, somehow market-driven on what's happening in each of our markets. Thirdly, the strategy is we are adjusting our clients' contracts according to our inflationary cost that we are facing through labor and other materials. It's threefold, and we're very focused on it. We monitor it very closely. That's the new reality. Now, on recruiting side, like I said, we have strategies. We work with sponsored immigration wherever we can. It's not all the markets that are affected in the same way, but it's a global strategy that we put forward. That's regarding the labor. Your second part was regarding inflation, if I recall. I think I kinda answered it that yes, CBA that we have, example in Quebec, where we had a CBA and a government parity committee. These numbers were set for many years to come. I cannot foresee exactly what's gonna come or what's gonna be ahead of ourselves if there will be some, you know, negotiating that could happen in the future. Yes, where the CBAs are signed and with longer terms, we are continuing to work with those rates. Wherever we see that it comes due, for sure there is a wage increases to face with the inflation. Again, the strategy here is to really align customer revenues with our inflationary cost structure. That's really helpful. Thank you very much. Thank you. Next question will be from John Zamparo at CIBC. Please go ahead. Thank you. Good morning. Good morning, John. I wanna start with the IFS business and just would like to better understand your goals and timelines here. Is this business completely incremental to the existing operations? Can you talk about the margin profile of this work? The IFS business is actually. Okay, let me just try to find the right approach for it. What we are seeing is customers have a tendency or have a will to regroup our operating and real estate operating services into one single contract. Our IFS group is there to, you know, manage and to operate an environment where there are several supplier contracts. The revenue of those contracts, the margins, more or less, the margin is within our business segments. The Technical Services segments operate the contract with the margins, and the general service businesses do the same. What you have in IFS is you have the revenue, but the bulk of the, I would say, the profitability is within the business segments. The IFS objective is to actually cover its cost for managing the infrastructure of management layer on top and managing other trades that are delivered to services. For say, we have to keep in mind that this segment will generate revenues. It will generate some EBITDA, but not at the level of the business unit because they capture these revenues and they capture this margin. Am I clear enough? Yes. You understand that? You know what? They're passing through a lot of revenues to the divisions. Understood. Thank you. Okay, John. Um... Okay, good. Yeah. I wanted to switch to Technical Services. Can you add some color on what you're seeing here? I wonder how you think about operating conditions versus, I don't know, pre-pandemic and to what extent they are getting closer to returning to whatever the new normal is. I wonder if conditions improved during the quarter or if they have improved subsequent to it. Okay. Well, listen, you know what? The start of the year, if you allow me, there was a kind of a double whammy in the sense that usually our lower quarters because, you know, the structure of it is maintenance contract and AC units are not operating. So it's always a lower margin quarter. The first quarter and early in the second quarter, we had significant delays, equipment, general contractors being delayed because they have equipment issues or delivery issues. So it was a little bit challenging. Now the good news is what we are seeing towards the second quarter and entering in the third quarter is this situation seems to be getting back to its normal. Our latest analytics shows that we're getting back to a more to a normal level of activity. For us, it's very encouraging for the remaining part of the year, understanding also that we have a very significant, well, actually a record backlog. Provided we get machinery, the equipment and the resources to execute, I think we will see. I don't want to be doing some forward-looking. I don't know exactly where to stand on that one, but we're very positive for the rest of the year. Okay. That's good color. I wanted to follow up on Michael's question on Janitorial and particularly in Canada. I think what a lot of us are trying to get a sense of is the sustainability of recent performance. I know there's a lot of unknowns and you don't have a crystal ball. But when you have conversations with your biggest office clients, what can you share about their plans for upcoming quarters? Do you get the sense that like they are generally satisfied with the amount of service they are purchasing now? Well, I'll be very blunt with you. You said that we have no crystal ball, and unfortunately many of our clients, I would say many of our clients, they don't even know how they will manage, you know, midyear, mid-term to long-term. We were expecting a return to normal by the second quarter last year. We were expecting it, you know, early this year. At this time, it's the only thing I can predict is I think it will be a slow return to normal over the next four, five, six quarters, and there would be market adjustment. But again, I don't expect the occupancy level to come. You see, before the pandemic it was there was a race to how much people you can stack in 1,000 ft. You know what? We're no longer there. Now people understand that there is a price to pay. I think that occupancy level overall will fall a little bit in the more sustainable level of occupancy in buildings. Now, the impact of hybrid work over time, you know what? It's also something we have to deal with. I think the main thing we have to understand is we are absolutely certain that going forward, we're gonna have to show a lot of flexibility and a lot of customization with our customers. We're geared for that. We're prepared for that. We have different strategies and different service level offerings that we have prepared. At the end of the day, by delivering enhanced services and heavily customized services will be more rewarding on the bottom line. This is an absolute fact. Now to what level? You know what? We think it's gonna be a slow pace over the next three, four quarters. For sure, you understand that we are very pleased to, I would say, make our client aware that you know the removal of enhanced services can have a negative impact on their occupancy and their operations. Customers are sensitive to that. Okay, understood. I appreciate the color. That's all for me. Thank you. Yeah, I would love to give you numbers, but your guess is as good as mine to some extent. Thank you. Fair enough. Thank you. Your next question will be from Zachary Evershed at National Bank. Please go ahead. Good morning. Thanks for taking my questions. Good morning, Zachary. How are you? I'm great. Thanks. Given the lower density of people in offices, are any of your customers pushing for a lower cost per square foot when they're renewing their contracts? Well, listen, you know, we have to understand one thing is the lower occupancy does not remove the fact that we still have to clean. It's not like I can. You see, if we have a lower occupancy, we still have to do all the public space we need to cover, and we need to run through the floors, and we need to service washrooms and everything. Lower occupancy in my book is offset by a little bit the enhanced services or partially by enhanced services we need to deliver with a higher frequency of cleaning. You know what? Unless Mr. Customer has significant decline in occupancy, you know what? To free up some space or whatever, we don't expect the price per square foot. Wherever the offices are occupied, we don't expect the price per square foot to drop. Especially with this inflationary period, that's another fact that customers and we all have to live with. Makes sense. Thanks. Following up on the Technical Services and the supply chain disruptions directionally improving, do you think we'll get a bit of a double cohort effect as equipment shipments start to flow better and things start to come in at the same time? Okay. You know what? I'm not sure actually. You said, and I missed a word. It says, do you think that the equipment coming in with what type of effect? A double cohort where you're getting shipments all at once as supply chains improve. Okay. Forgive my bad English. Cohort, I don't know what it is. No problem. Where you start to receive shipments that you ordered three months ago and two months ago at the same time, so you're able to undertake a backlog of two months in a single. I see. Well, you know, so far so good. You know, I would say equipment. By the way, first of all, the way projects are calculated, the equipment is on site for us. It's realized revenues. On that front, it's okay. We're covered on that front. On the install and, you know, the, there's no significant issues that has arisen so far, and I don't foresee one. You know what? We have the resources to execute on projects. You know, whatever delays we had upstream in the projects, they're done. It's gone. So now we're processing more as normal right now. You know what I'm saying? It's not like we had a month and a half delay upstream, and now we have a month and a half left to deliver. You know, all the projects are adjusted consequently. Understood. Then just one last one on Technical Services. How should we think about the magnitude of the drag on margins in the back half of the year, and maybe split up into Q3 and Q4? Oof. You know what? I don't have a figure. I would have to figure it out. First, for now, what I can tell you is, we expect a strong next two quarters as far as margins. This, I can tell you this. All right. Thank you very much. I'll turn it over. Thanks. Thank you. Once again, ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by one on your touchtone phone. Your next question will be from Frederick Tremblay at Desjardins. Please go ahead. Follow up on the IFS. Just trying to better understand the targeted client base for IFS at this stage. Is it totally new customers to GDI that are interested in this offering, or do you also have clients that maybe currently use one of your services and maybe are looking to add more to the services provided? Okay. Well, listen, it's a mix of both. Fortunately, what we have so far, we have been able to partner with our two new clients. Yes, it will be a mix. What we want to achieve is this. We want to make sure that our existing client base that is looking forward, you know, concentrating their services, that we're there for them, and we are able to undertake. I don't want the competitor to take the client away from us because we lack a market presence. Secondly, yes, we will certainly continue to develop in our new market segments. Mind you, an existing customer that works in one service with us and we are able to develop an IFS contract, revenue sometime will triple and quadruple for that same client. So it's a game. Anyway, with a new client, it's a gain. It's not a wash. Perfect. That's helpful. Just to clarify also on the new contract with the aerospace client, did that start in Q2, or is it something that's gonna start later in the year? Well, it will start towards the end of Q2, and let's say it will be a Q4, probably more of a Q4 revenue stream. Perfect. Last question for me on acquisitions. You know, with IH Services, you know, being your largest acquisition ever and exceeding your expectations so far, does that kind of motivate you guys to look at other large transactions and maybe just general comments on your M&A pipeline at this point? Well, listen, we are still very active. You know, we are very focused now on integrating the businesses, and between now and the end of the year, they will do significant actions in the marketplace in our integration and consolidation action plan. This is one thing I think I wanted to convey to you. For sure, we are always on the lookout to find the right partnership and the right business and the right market at the right price. We're very, very picky. At the end of the day, there will be opportunities. You know how it is. I cannot divulge more, but I would just say that we're active. We're very active, and we're focused on. You know, I think one of the success of GDI has been that we have been somehow prudent and intelligent in the way we do our acquisitive strategy, and I want us to focus on those criteria going forward. Market went a little bit berserk last year, and we were able to, you know, to manage something significant, but at a reasonable within the reasonability of the business. I want to continue to do that in 2022 and 2023. There will be opportunities, but we won't drop anything that moves. Very good. Thank you. Thank you. At this time, gentlemen, we have no further questions. Please proceed with your closing remarks. Well, thank you very much again. I would just share with you that it has been very interesting times that we're living in, especially in our business segments. We have a mix dealing with a lot of things that, you know, we are now anything but a clockwork business. You know, there are many aspects of the business we deal with. I can just outline the efficiency of the teams that we are very fortunate to have. We respond well. They react quickly. We adjust quickly. We are focusing on the right thing. This, I commend the team, and I want to take this moment to thank every one of them because at the end of the day, this is the team that delivers the results. Thank you very much again for the call. Thank you, Mr. Bigras. Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.