Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the H2O Innovation conference call announcing its Q1 2022 financial results. Bonjour, Mesdames et Messieurs, et bienvenue à l'appel de conférence d'H2O Innovation annonçant les résultats financiers du premier trimestre de l'exercice 2022. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press the star key followed by zero for operator assistance at any time. Cet appel se déroulera en anglais, mais n'hésitez pas à poser vos questions en français. Before turning the meeting over to management, please be advised that this conference call will contain statements that could be forward-looking and subject to a number of risks and uncertainties and could cause actual results to differ materially from those anticipated. I would like to remind everyone that this conference call is being recorded today, November 10, 2021 at 10:00 A.M. Eastern Time. I will now turn the conference over to your hosts, Monsieur Frédéric Dugré and Marc Blanchet. Please go ahead, gentlemen. Hi, good morning, everyone, and thank you, madam. My name is Marc Blanchet. I'm CFO of H2O Innovation. This call will be held in English, but I'll just say a brief word in French to our French audience. Merci. Bonjour à tous. Dans un premier temps, j'aimerais vous remercier d'assister à cet appel et vous indiquer que même si l'appel se tiendra en anglais, nous répondrons aux questions qui seront posées en français par la seconde partie de l'appel. Pour faciliter le suivi de l'appel, je vous invite à télécharger la présentation sur notre site Internet h2oinnovation.com dans la section investisseurs. Before we begin, I invite you to download a copy of today's presentation, which can be found on our website at h2oinnovation.com in the section investors. Frédéric Dugré, our President and CEO, is joining me today for the call, which duration is approximately 30 minutes. During this call, Frédéric Dugré will give an update on the business and present the highlights of the Q1 ended September 30, 2021, and I will be presenting the financial results. Please take a moment to read the forward-looking statements on page two and the non-IFRS financial measurements on page 3 of the presentation. I now hand over the call to Frédéric Dugré. Well, thank you, Marc, and thank you to the analysts and the shareholders for joining the call today. We are really excited to present you our financial performance and company's business progression for the quarter ended September 30. The Q1 of our new fiscal year start really on the right foot as we're presenting sustained growth and margin expansion, proving again the scalability of our business model. Revenues for Q1 have increased by almost 10% as a result of organic growth initiatives and acquisitions realized in the previous fiscal year. During the same period, we have grown our adjusted EBITDA by 15% faster than our sales. Our adjusted EBITDA stood at CAD 4 million in our, you know, or the equivalent of 10.5% of our revenues. This performance is absolutely in line with our three-year plan, which aim at growing our adjusted EBITDA above 11% by the end of June 2023. The net earnings remain positive at CAD 600,000, despite an increased amount of tax paid. Our consolidated backlog stood at CAD 123 million compared to CAD 121 million in the previous year. The good news is that our consolidated backlog, combining the projects and the long-term O&M contracts, is diversified with industrial and municipal projects and contain projects at superior margin. The balance sheet is really in good shape and is not over-leveraged. The net debt has momentarily increased in the amount and due to an inventory augmentation in order to face logistic challenges and an increase in our work in progress from the WTS business pillar increase. Marc will cover that later in the presentation during the financial review. Lastly, we're happy to maintain our recurrent revenues by nature to a higher level as our team continue to do everything to retain our customers and sell more products through multiple business synergies. Thanks to our high synergistic business model, we continue to add financial predictability and strength. Moving to page five, let's look at the highlights of our Water Technologies and Services business pillar. As announced in the previous quarters, our WTS business pillar is starting to build good positive momentum. In the Q1 only, we added 10 new capital equipment projects for a total value of CAD 14.7 million. These new projects pushed the WTS backlog to CAD 41 million now, and it represents an increase of 12.3% year-over-year. In the same period, many projects reached substantial completion and allowed us to increase our work in progress and revenue recognition. Our various business initiatives, including the addition of regional account managers to grow our service division, are definitely paying off. Indeed, we are showing an increase of 30 in the revenues generated from the service and aftermarket. This is really positive as it is directly in line with our objective and mission to retain and grow relationships with our existing and new customers. The capital equipment backlog remains well-balanced and diversified, with 33% of industrial projects and 67% of municipal-related projects. Looking at the lower pictograms, we can see the evolution of the WTS activities compared to the previous quarter. Clearly, our engineering, fabrication, and commissioning teams are extremely busy with multiple projects on the way. As previously mentioned, it is just a matter of time before seeing these projects moving from the engineering to the fabrication phase, where usually most of the dollars are recognized. During the Q1 of our new fiscal year, we started to observe an increase which is starting to impact positively our revenues. Looking at the overall business activity, sales backlog, and pipeline of new opportunities, we believe the WTS business pillar is at the beginning of a growth cycle, which will impact positively the current and the following fiscal years. The growth momentum doesn't consider any impact of the large American stimulus plan for water and wastewater infrastructure, which could also accelerate our growth in the coming years. Let's look at page six for the performance of our specialty product business pillar. Even though revenues for specialty products remain fairly stable for the Q1, our EBIT increased by 30.4% compared to the same quarter in the previous year. The improvement for the profitability is due to a higher proportion of sales coming from the specialty chemicals related products, which are usually characterized with higher gross profit margin products. Not only we are observing an increasing amount of specialty chemical sales, but we are also capturing multiple sales synergies between our business line, PWT and Genesys. These synergies led to new orders and the signature of five new distribution agreements in Latin America. Following the acquisition of GMP in February 2021, we are taking more and more advantage of our office and team located in Santiago, Chile to drive new business opportunities. Our maple equipment product line continues to grow. For this reason, we are ramping up our inventory in order to face this high demand for our products. We are also forecasting a sustained growth in the coming 2-3 years, driven by the increase in quota production. Indeed, the Quebec government announced the release of 7 million of new taps, which should increase by 10%-15% the overall maple syrup production capacity. The addition of these new taps represent a great opportunities to increase our market shares in the coming years. Our specialty chemicals side, the two product line, Genesys and PWT, have become one single business together, becoming H2O Innovation Specialty Chemicals Group. The business combination, while keeping the two brands separate, will allow us to gain business efficiencies in sales, manufacturing, and product development. Within six months, we added three new territory managers to interact with existing and new clients in key geographies such as Southeast Asia, India, and the Kingdom of Saudi Arabia. On top of Latin America, we believe that these areas will generate significant growth in coming fiscal years. Talking about the growth in key markets, we're proud to announce that we started to deliver our PWT specialty chemicals to the largest desalination plant in the world, Taweelah, located in UAE. Let's move to our operation and maintenance business pillar presented at page seven. Our O&M group is starting the new fiscal year with good momentum with the start of two new long-term contracts. Our first one located in the state of Rhode Island for the city of Warren. For this contract, we are providing the operation and maintenance of a 2 million gallons per day wastewater plant and the maintenance as well of multiple pumping stations both in the city. This represents an increase of $5 million to our O&M backlog. The second contract is for the city of Laurel, Mississippi, which I had the chance to visit a few weeks ago. For this project, a new team is providing public work services to the city. In this case, we are adding $10 million to our O&M backlog with this 4-year O&M contract. As previously discussed, we are in the process of renewing large O&M projects, which should replenish significantly our O&M backlog. We're confident in our ability to renew these contracts based on customer satisfaction. Moving to slide 8, we see the results of our constant efforts to expand the EBITDA margin faster than our revenues. Indeed, in the last five years, the adjusted EBITDA progressed by 37% every year on a compound annual basis due to the solid business execution, strategic acquisition, and successful integration. During the same 5-year period, the revenues have increased by 20% on a compound annual basis, combining organic growth and acquisitions. Moreover, quarter after quarter and year after year, we are capturing business synergies between our different business lines, allowing us to improve our operational efficiencies, leverage our sales network, and most importantly, retain our customers. Talking about customer retention, we see at slide 9 that we have been able to maintain the high level of recurring revenues by nature. Going through the pandemic, we validated the robustness and resilience of our business model at multiple times. The strategic decision to focus in growing recurring sales and customer retention have allow us to significantly de-risk the business and improve our gross margin and adjusted EBITDA. Thanks to the multiple synergies that we have between our different business lines, our discipline in integrating the acquired company, and our focus in capturing projects at higher margins, and our high customer retention, we have improved significantly our financial performance and predictability. I will now pass it on to Marc Blanchet, our CFO, who will review with you and discuss the financial performance of our company during the Q1 of 2022. Thank you, Frédéric. Now I invite you to go to slide 11 to look at the financial highlight for Q1 fiscal 2022. If we look at our revenue, we're reporting revenues of CAD 38.4 million compared to CAD 35 million last year. It's an increase of 9.7% compared to last year. Assuming a constant US exchange rate during this quarter, the consolidated revenue would have increased by 13.4% instead of 9.7%. This overall increase is fueled by the acquisition of GMP and also some organic growth. The gross profit margin ratio increased to 28.4% compared to 27.1% last year. This increase is explained by a greater proportion of revenue coming from specialty chemicals, which comes with higher gross profit margin. The adjusted EBITDA improved by 15% compared to Q1 last year and reached CAD 4 million, representing 10.5% of EBITDA over revenues. As for the net earnings, we're reporting CAD 600 thousand compared to CAD 1 million last year. The variation of these net earnings is explained by higher tax expenses as well as higher other gain and loss resulting from the revaluation of our contingent consideration. The reassessment of the contingent consideration has been done following the financial performance of GMP that was beyond the initial forecast for the Q1 of 2022. Now let's move to slide 12, and we'll go over financial results, each business pillar by each business pillar. The first one is Water Technology and Services or what we call WTS. The WTS financial performance for Q1 was very strong with 44% growth both in revenue and EBITDA compared to last year. The three-year strategic plan consists of expanding service activities and prioritizing WTS projects with higher gross profit margin. The addition of new resources to expand services activities have allowed us to grow revenue for those service activities by 32% year-over-year. Projects have also had a strong organic growth with an increase in revenue of 44% compared to Q1 last year. WTS gross profit margin decreased slightly to 23% compared to 25% last year. It's explained by the business mix. There was more sales coming from water treatment system projects compared to the same quarter last year, where we had more sales coming from service, and service has higher gross profit margin. Nevertheless, the EBITDA remained at 11.1% and increased by CAD 300,000, which is a 44% improvement of the profitability. With CAD 9.9 million of new industrial and municipal projects at the end of the quarter, the backlog of WTS stood at CAD 41.2 million compared to CAD 36.7 million last year. The backlog is well balanced between industrial and municipal projects. In terms of proportion, it's about a third of industrial projects and two-thirds municipal. The pipeline is very rich in opportunity. As Fred explained earlier, the infrastructure plan that has finally been adopted in the U.S., I think it was last week, should allow the financing of many projects that we have in our pipeline. Even though it may generate many opportunities, we intend to remain disciplined in preserving a decent gross profit margin and focusing on customer that can generate recurring revenue rather than just growing revenues. Now let's look at Specialty Products. Slide 13. Even though revenues from Specialty Products remained fairly stable for the Q1, EBITDA increased by 30% compared to Q1 last year. The improvement of the profitability is due to a higher proportion of sales coming from specialty chemicals. Last quarter, I explained the challenge of this business line. Specialty Products is a business based on export of products to our distributor network. Some of our products are manufactured in our facility in Canada, California, or in the U.K., and others are manufactured by our suppliers that are based in China, Tunisia, and Spain. Due to the messy situation with international logistics, probably you're all aware of it, but as many other companies, we're facing different challenges related to transport and freight of goods, and related also to inflation and shortage of raw material. There are still many uncertainties coming from the supply chain and logistics situation, and we're taking proactive measures to mitigate these risks. One of those measures that we took over the last few months is to increase the level of our inventory of raw material and finished goods of our different specialty products in order to be able to maintain the supply of our distributors. As the situation evolves, we will stay agile, proactive, and opportunistic to mitigate as much as possible the risk and differentiate ourselves from our competitors to increase our market share. If we look now at the revenue for Q1, they were pretty stable, as I said earlier, at CAD 11.3 million compared to CAD 11.4 million last year. The CAD 100,000 decrease of revenue is explained by the foreign exchange. I talked about it. We were all, again, impacted by unfavorable foreign exchange rates compared to last year. The impact for that business line is CAD 300 thousand on the revenues, the reduction of sales for peat moss product compared to Q1 last year. Last year, peat moss as a Q4 and Q1 last year, they were very, very strong. This year, they were mostly back to normal. Therefore, business mix here, as I explained earlier, with more chemical sales. Offset, as I said, more chemical sales coming from GMP acquisition, which generated CAD 2.4 million of revenue, and other organic growth in the specialty chemical products. It's especially Genesys and PWT that had very strong quarter. The increase of EBITDA is coming from an increase of revenue, the addition of GMP and improvement of the gross profit margin, which stood at 53% compared to 42% for Q1. This variation of gross profit margin is in EBITDA mainly due to business mix, as I said earlier, high level of revenue coming from chemicals, which comes with higher gross profit margin. Now let's look at slide 14, Operations and Maintenance. Again, this quarter compared to last year, the O&M business pillar was impacted by negative foreign exchange. That's the business pillar that is mostly impacted. The impact for this quarter compared to last year was CAD 1 million on the revenues and CAD 4.1 million on the backlog. Despite this unfavorable foreign exchange rate, in fact, revenue increased by 4%. Revenue for Q1 of 2022 stood at CAD 18 million compared to CAD 17.4 million last year, representing an increase of CAD 600,000. This business pillar showed organic growth of CAD 1.6 million this quarter, which growth was partially offset by unfavorable exchange rate. With a constant exchange rate, the growth would have been at 9.2%. The gross profit margin was also affected by timing and some of construction work on O&M contract, which caused decrease in percentage of gross profit margin from 18%-16% compared to last year. At the end of the Q1, the O&M backlog stood at CAD 81.6 million compared to CAD 84.7 million last year. We would have seen an increase of CAD 1 million of the backlog, assuming a constant exchange rate. As we said on previous call, backlog contains some contracts that are approaching their renewal date, creating important fluctuation on the O&M backlog. O&M long-term contract have a typical duration of 3-5 years and have different anniversary date for renewal. Since we have a very high renewal rate with more than 93% of operational maintenance contract renewed since the acquisition of Utility Partners. We believe that we were well-positioned to replenish the backlog in the coming 12 months. It's also important to note that the O&M contract of the previous acquisition in Texas, so Hays and Gulf, are not included in this backlog, since most of the contracts are with municipal utility districts and are usually evergreen contracts. Let's look at the financial position. Slide 15. The working capital, which is reconciled in the appendix 23, increased by CAD 1.4 million during the Q1. The variation of the working cap is mainly due to increase in inventory and in contract assets. The increased inventory is partly due to the proactive measures I explained earlier, which is to maintain a higher level of inventory in order to mitigate the risk of the current supply chain matter. The growth of the inventory is also driven by maple business line, which is currently building its inventory for the upcoming maple season. As for the other working cap items, I won't go over each of them since the variation compared to June 30 balance sheet is essentially explained by the growth of the corporation's activities or the impact of the foreign exchange. The net debt on slide 16, we can see the evolution of the net debt since Q1 2021. Over the last four or five quarters, we reduced it by CAD 10 million compared to last year. Therefore, on September 30, the net debt stood at CAD 3.4 million, but if we compare it with June 30, which was at CAD 0.5 million, this increase, there's been a slight increase. This is mainly due to cash flow used in our operating activities with the increase of the inventory and the higher work in progress in WTS business pillar. Essentially, we increased a bit the net debt, used our cash to increase inventory, and also to finance the work in progress for WTS activities. Contingent consideration also increased by CAD 800,000. I explained it a bit earlier, but essentially, we had to reevaluate the contingent consideration for the acquisition of GMP since GMP's performance was, you know, significantly better. Therefore, we expect to pay a higher earn out. Essentially, that's good news for us. It means that they're performing better than what we expected when we bought them. Cash position is still very high at CAD 11.8 million as of September 30. This balance sheet puts us in a good position to pursue our M&A strategy, which was communicated in our three-year plan last December. Now I'll pass over the call to Frédéric for concluding remarks or takeaways. Thank you, Mark. Let's move to slide 17 for the conclusion and takeaways. Overall, our company is doing very, very well as we're seeing growth and/or margin improvement in all our business segments. As recurring revenue is maintained high, we are retaining successfully our customers and capturing sales synergies through our multiple sales channels. On the heels of this lasting pandemic, we continue to create value from the acquired companies to strive for innovation, to recruit new customers and find ways to improve our operational efficiencies, which allow us to grow the adjusted EBITDA margin to 10.5% at the end of this Q1. With our strong financial position, as Mark said, not over-leveraged, we can envision the coming quarters and years with confidence. We're well indeed positioned to achieve our goals set in the 2023 three-year plan, which is notably to grow the company revenue between CAD 175 million-CAD 250 million organically and with 2-4 acquisitions, and second, to grow the adjusted EBITDA margin above 11%. The water industry remains very fragmented and attractive for water-related companies, suggesting a potential upside for H2O Innovation valuation. On the other end, we want to remain disciplined in the multiple that we're paid. So far, if we look in the past 5 years, we have been able to close 5 transactions with specialty products and O&M companies at affordable EBITDA multiples. Last year only, we closed 2 acquisitions, and we remain confident in our ability to continue our acquisition program as presented in a three-year plan. As mentioned in my previous presentation, the water sector and its investment thesis is, and will remain very attractive for many years. This is driven by strong and sustained fundamental drivers that the planet is currently facing. One, notably, growing water scarcity with more and more drought events in highly developed and populated areas. The second, tightening and more stringent regulations driven by emerging compounds such as PFAS, microplastic, and hormones that we find in water. Also, the urgent need of investment to upgrade or refurbish or even expand aging water and wastewater infrastructure. The stimulus plan in North America is going along these lines. Finally, the constant population growth, which will further push the adoption of water reuse and installation for decentralized water and wastewater plants. All these factors will continue to influence our industry and should continue to impact positively our business. I will now turn it back to the operator for the Q&A session. Thank you very much. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Your first question comes from the line of Michael Glen with Raymond James. Your line is open. Hey, good morning. First question just on the Specialty Products segment. You're talking about a lot of initiatives taking place there to grow that business. Can you just give some thoughts about how we should think about revenue growth through the balance of this year? Should we anticipate some new business to roll in that we could see some upside surprise on revenue? Is there anything there worth thinking about? Well, there's two things we're trying to do in this business pillar. Drive and push new products in order to find ways to mitigate, you know, any price increase or price decrease or competitive environment. Innovation will allow us to somehow maintain the current margins that we're enjoying. Second, as I said, adding more distribution, more synergies within our different sales channels. I think we should be able to position the company in order to beat what the current market is growing at, which we believe depending on how you look at it for desalination market or not, you know, between 4%-6%. We're positioning it to accelerate and be able to beat the current market with all these initiatives together. Mark, if you want to add any on the... No, it's exactly that, Fred. I mean, recently, I mean, we have launched a new product that was last week, the Pi-Perm from Piedmon t. As you said earlier in the call, we've signed five new distributors in Latin America. Those are all key drivers. When you bring on these new distributors, is it a function of taking market share? Is that the primary method of growth there? Yes. It's taking market shares. You know, either they're switching, they were distributing, let's say, a competitor product line, and now they're switching to us. Or it's also coping with the growth because as the overall, let's say, water industry is growing, desalination water use market is growing globally. When there's a new plant being put online, this plant requires more components, require more chemicals, more consumables to get it going. There's the organic growth and the market shares that we're taking. Okay, perfect. Switching over to WTS. We're looking at this number of projects that transitions from engineering into fabrication. It does seem like a notable jump that could take place. Are you able to give any indications what this might mean, how this might impact top line over the next few quarters? Well, it's tough to give indication, Michael. Because, you know, each project have different size and the milestone or the schedule of the milestone of revenue recognition is that something that we express but or we disclose. You know, obviously it will have an impact on revenues. We saw it on the last quarter. I mean, we've been talking about that over the last year since we pulled out that matrix last year. We can see that revenue grew, you know, by almost 40%. You know, I don't want to give too much forecasting, but we should expect to see those revenue at similar level or even maybe higher as we continue to recognize milestones of revenue recognition. One thing though that we all have to pay attention, project comes with a bit lower gross profit margin than service or so as we saw this quarter, in terms of dollar generated, that's great. Just model accordingly the gross profit margin for that business pillar. Then of the 33 that are in the engineering phase right now, is there a timeline? Can you give an indication of what number of those would transition to, say, fabrication over the balance of the year? Yeah, it's hard to model because you may have projects of smaller size, Michael, let's say, a project of CAD half a million. Obviously, the engineering spend on it and the turnaround on the fabrication will take within six months, right? On the other end, there are, you know, massive and bigger projects of CAD multiple millions, currently on the way where they will take, and they'll be most likely over two fiscal years. So it's hard to model. We have, let's say, a fairly good portion of the current projects, I would say close to 40% that are smaller size that are coming around and a bit more accelerate the recognition by the end of this fiscal year. We have another more important portion of the projects of bigger size that will impact the current fiscal year revenue and the following one as well. On the other end, we have. I don't want to say a limited capacity, but we've said it for a long time. We want to stay disciplined in making sure that we address the good project that will make good profit margin and generate recurring revenues. Therefore, the objective is not to grow the top line of that business pillar like super high and relive that lumpiness that we lived in the past, but really focus on the quality of revenues with revenues that will be recurring and projects that are flagship projects for us. Okay. Thanks for taking the questions. Your next question comes from the line of Endri Leno with National Bank Financial. Your line is open. Oh, hi. Good morning. Thanks for taking my questions. I was wondering if you can start a little bit with the SP segment. I was wondering if you can talk about the sustainability of margins that you realized in this quarter. Are they sort of a one-time thing, and how well they develop, or should they be sustainable with the new product that you're introducing? Well, yes. I mean, it's a great question. Timing seems to be now perfect after all these years. I think we've talked about it previously. We have a group of chemicals in the portfolio that are absolutely in line with the current challenges that we're facing, the market is facing. There are green chemistries allowing us to make these chemicals at a higher concentration, 11 times, allowing also to reduce the cost of freight by 11 times. They are sustainable in two ways, reducing for the customers the cost of freight and then emissions, but also because they're made without phosphate, so they're phosphate-free chemicals, so we call it the green chemistry. This is one aspect of really right now compelling that we're starting to observe more and more of our distributors internationally are starting to adopt and are looking to have access to the PWT specialty chemical line. We'll continue to obviously do both of them, but it seems that right now we're getting really good traction on this product. You know, overall, the sustainability and the overall market, mostly from industrial customers looking for water reuse solutions, is also another driving factor. Projects like we did in the past with Philip Morris, for example, where we had to build on their campus the water reuse facility, is an area also that we're starting to see more and more and things that we're going to repeat for other similar industrial customers. Overall, I believe that, you know, we're seeing, generally speaking, the market that water reuse, so recycling wastewater and reusing it for either irrigation purposes or cooling towers or boilers or other industrial processes, is growing twice as fast as the overall market, the other market for desalination and wastewater. Drivers are there. We have the technology. We have the track record. We have the products. It's a matter of just execution. Okay, great. No, thank you. That's good color. The other question on the SP segment, I was wondering if you can talk how much of the revenue delayed from the prior quarter, I mean, if you can quantify how much of it was recognized in this quarter and if you've seen any further delays at this point with, you know, let's say, Q1 intended revenues that might be pushed to Q2? Andre, this one means that we, you know, we have a very established schedule, and it's not that the case like that. I mean, I cannot quantify how much revenue were delayed, and I won't, but I understand that you're trying to understand and modelize, but it's really I mean, right now, I mean, it's just a matter of meeting Incoterms, and having an order that is ready on the dock and waited for the transporter to come and pick it up. How much was delayed and how much has still been delayed or have we, you know, now created like that delay is just going to catch up. I cannot quantify that, and it's a moving target to try to explain that. On the other hand, Endri, I can tell you that it's not that different than what it was on June 30. It seems that, you know, we're taking into account that, you know, there will be in the coming quarters and coming an amount of products that unfortunately will be shipped from one quarter to the other. What wasn't delivered on June 30, at the end of our fiscal year, was delivered in Q1. Now, whatever chemicals or product wasn't delivered on Q1 will be pushed to Q2 and on and on and on. Again, it's not sales that we're losing. It's sales recognition, revenue recognition pushed to the following quarters due to, you know, the constraints that you well know on the trade there. No, great. Thank you. The other question I wanted to look at actually for both WTS and O&M, they had a bit higher compensation costs. Was this what you expected, or was it driven by the tight labor markets out there? As a broader question, how do you feel about staffing at this point? You said they had a higher what? Sorry, I kinda missed it. Higher compensation costs. In terms of sales? Sales costs? Compensation in WTS and O&M. I mean, was this higher the compensation cost than what you expected, or was it driven by the labor market? I'm sorry, Endri. I'm trying to understand what you mean by compensation costs. Oh, the SG&A costs were a little bit higher, I guess, in W. Okay. Yeah. We did some hiring of sales resources as we said we would do. We were waiting at the end of the pandemic so we could have those hirings joining the company in order to capture growth. We had some new hirings. The objective of those new hirings are sales resources in order to capture more growth. There's been also some traveling that started. Our sales team has started to travel again and meet customers, attend trade shows. Right. not existing last year. That's where the increase of the SG&A. It doesn't necessarily come from like, increase of salaries that we needed to do. It's really coming from investment in new sales resources and sales Okay. No, this is. This is where we have, you know, the regional account managers for service and aftermarket business. Similarly, we did the same also with three new guys joining the team in the last six months on the Specialty Products as well. That's why you should see, and you will see an increase into expenses there. Okay. Great. Thank you. Now a couple more questions on the O&M segment, and then I'll turn the line over. You mentioned there were some delays in Q1 in construction projects. I mean, have they been caught up? I mean, any color you can give there? Yes. Yes. It's really just a matter of timing between because we don't do WIP the same way we do WIP in projects. You know, in these cases, particularly these cases, we had the expense, but we didn't invoice, so we couldn't recognize revenue, but we had the expense. That's the delay there. Okay, great. You mentioned the renewing of one large project in the prepared remarks. It appears that the bidding has been extended to mid-November from the RFP. I mean, is there any color you can give, and when do you think the outcome might be announced? It's just that the client, you know, was asking for addenda, based on, additional scope of work possibilities. There's now a number of options that the customer has in front of him to select a final scope of work. If there's anything, we could see a potential scope increase into our current service. Okay. I think the bidding happens before the end of the month. Hopefully we'll get some news, hopefully before Christmas, and it may even go until January. Okay. Awesome. That's great color. Thank you very much, and congrats on a good quarter. Thank you. Great. Thank you. Hello? Any other questions? I think you're on mute. Your next question comes from the line of Frédéric Tremblay with Desjardins. Your line is now open. Okay. Thank you. Good morning. Staying with the O&M segment, just wondering if you could comment on the bidding activity for new business, what you're seeing out there in terms of opportunities for that segment. Yes. I think we've never seen the team so busy in the last couple of years on new opportunities. There's two things. There's the new opportunities that we're currently working on. As we said previously and explained, in the O&M world, it is equivalent and as important as winning new projects to renew the existing ones. The amount of time and effort spent by the team to renew the existing large projects we have currently in Mississippi is as important as, you know, winning new ones. Now, we're seeing currently activity and growth opportunities in a bit everywhere in our sector, in the Northeast, in Mississippi area, and in Texas. I think we'll see organic growth this coming fiscal year for the O&M, and we feel pretty excited about it. Great. Switching to desalination. I know that market had a bit of a pause recently. Mm-hmm. market-wide. What's your expectation going forward, maybe in 2022, in terms of level of activity there with, you know, contract awards and different projects? Yeah. in that category? I think the pause now is done and behind us. The GWI, Global Water Intelligence, agency in U.K., just revealed this week that they're forecasting 2022 as being the largest desalination year ever for the construction of new desalination plants and water reuse. Desalination plant and water reuse goes hand in hand. On top of that, they're expecting to see even continuity of growth for 2023 calendar year. I think what we're doing right now, what we have done in the last couple of months to add number of distributors, to push new products, to continue to combine our business, is going to pay very, very well, not only for the coming year, but the following one as well. I couldn't be more excited. Great. I guess, are the near-term opportunities there for you guys more on the Piedmont side, and then maybe moving on to specialty chemicals over time? Is that how we should think about it? Yeah. I mean, Piedmont obviously is more sensitive to construction of new desalination plant because they're more component driven. On the other end, the chemicals is to provide continuously chemicals and cleaners to existing and new plants. We're seeing growth coming from both opportunities. This is why we're so eager and aggressive right now in sales and positioning ourselves in Latin America and other key markets to grow and add presence in these key markets. Great. Last question for me. I think it was last quarter you had mentioned some selling price increases to offset inflation in some parts of the business. Just wondering if you could provide an update on that situation. Yes. In some cases we have been able to pass on price increases to customers. On the other end, we do have other contracts that are fixed price. We have been able to mitigate that through our procurement and supply chain and logistics department with various initiatives. Yeah, we have been able to also benefit from the O&M side, from the CPI adjustments on different contracts. Believe me, it's all hands on deck to find ways to mitigate that. That's why also, as Marc explained, you know, the purpose of us trying to increase a little bit the inventory to be able to benefit from volume, cost reduction, availability of products. We're taking multiple steps to mitigate, you know, price increases and availability of product as well. Great. Thanks for taking the question. Thank you. Thank you. Your next question comes from the line of Colin Healey with Haywood Securities. Your line is open. Hey, guys. Congrats on the strong quarter. Just to follow up on the topic of the increasing inventories to improve deliveries and service levels. Is the supply chain bottleneck that you're addressing really on the logistics side, or are you seeing any shortages in raw materials or precursor chemicals that's making it difficult to get stock in shorter time frames? Well, it's a little bit of both. The inventory ramp up is mostly driven also by one of our division, mostly around the maple division, where, you know, it's highly sensitive to stainless steel. This division is consuming and buying a lot of stainless steel, and we have the pre-committed amount of steel that we're buying at fixed price. This is where also we wanted to take the advantage. We have an increased demand for our product as we speak. We see the season coming up, so we want to be ready and available, and we have products available. This is why you see this ramp up. On the other end, for the chemicals, the main exposure we have is the price increase coming from phosphate-based product. This phosphate-based product we have been, I would say, strategic enough to secure a long-term supply at fixed price with one of our suppliers for the UK plant. Right now we still benefit from the same price, and we have been able to limit somehow the quote-unquote damages on this side. This is why also we have been pushed to make sure we have sufficient products that we can make these products as much as we could, you know, at the right price. It's a little bit of both. I think the mitigation on the chemical side for the phosphate decrease will be also coming from us trying to push more the green chemistry, which is not phosphate related. As much as we have seen an increase for the phosphate-based product, the Genesys product line, we're seeing, you know, marginal increase for the PWT product line, which is not using phosphate, the green chemistry. By all, I think we have the benefit of having the best of the two worlds, having the full product line. This is why we're taking more and more advantage of this green chemistry to push it to our customers. Okay, great. 5% margins. Right. Would you say that you'd see inventories kind of pulling back then a bit as we kind of now that you're prepared for the maple season? Personally, I wouldn't see that right now. I mean, talking with the procurement department, I mean, he's got the office next to me or close to me, two offices from me. I mean, I've authorized him to maintain a higher level of inventory. I mean, you know, I remember three, four years ago, we were saying, you know, inventory, keep it as a level just in time. During the pandemic, we increased it. I think now it's just in case. I mean, we, you know, we have a lot of revenues that are recurring. We're recurring. There's a recurrency pattern in the products we sell. Those are not going to become obsolete inventory. I think that right now, taking proactive measures to increase inventory and making sure that we have the inventory to answer to the demand. Buying more cuts the price. So it's the best defensive measures right now. Have products in hand, buy more product at a lower price for us is our best strategy. So that's why we've increased inventory. I don't want to give false expectations and see that inventory reduced at short term. Okay, great. Thanks, guys. That's helpful. I'll step out. Thank you. Thanks. Your next question comes from the line of Endri Leno with National Bank Financial. Your line is open. Hi. Thank you. Thanks for the follow-up. Just a couple of quick ones from me. First, I was wondering if you can talk a little bit on M&A activity. Is it something that you're still actively considering at this point? Or are your hands full with the ongoing projects that you have in-house? Sorry, can you repeat again because the line cut. I'm currently in a foreign country and- Oh, sorry. Yeah. I was just asking about the M&A outlook and, you know, what are you seeing out there, and are you still actively pursuing M&A at this point, or are your hands full with the opportunities that you have in-house? No, it's the same somehow, the same pipeline that we have been working on. Again, we want to remain disciplined. We have a number of opportunities and clear targets we're working on. What we presented in the three-year plan saying, you know, we want to do 2-4 acquisitions by 2023 is exactly what we're going to execute. Just want to be selective and disciplined again on the amount paid and on what these companies brings to the table in terms of synergies and growth opportunities. Okay. Thank you. One last one for me. I mean, you mentioned several times the call, Fred, on how hot the desal markets are. There was recently an announcement by to really increase their capacity for desal plants in the next few years. I was wondering if you can talk a bit in terms of what is. I mean, do you have a representation in the country? Would you be able to service it through other countries if you're not there? Would you need any investments if you'd like to participate in that desal market? Well, for us to participate in the desal market, we're doing it in two ways. I mean, we're doing it by selling and providing components of different types to EPC companies. The large Spanish, for say, you know, the Spanish and French and Italian and American EPCs that are the one mostly building the multimillion dollars you know of desalination plants of massive size, they are the ones that are buying our components. This is how we're addressing and participating to the growth. We do have number of distributors and agents that are helping us to push these different components to the different EPCs companies out there, you know, building these large desal plants. Second, the other way that we're addressing it is to provide the support when it comes to the consumable. Once the desal plant is online, they need continuously either anti-scalants, anti-fouling products. They need cleaners that we provide and filters that we provide on a continuous basis. It's two different type of products, two different kind of channels, but dealing sometimes with the same end user. That's how we will benefit, you know, from the current, you know, growth and boom that we're expecting into the desal and water reuse market. Okay. No, thank you. There are no further questions at this time. Monsieur Frédéric Dugré, I turn the call back over to you. Well, thank you very much for joining the call today, and I look forward to a call again at the next call, or presentation, which will be December ninth at the annual meeting of shareholders. We're going to update everyone on our three-year plan progress and also present you our ESG plan for the first time. Look forward to catch up with you. Have a great day. Thank you for joining. This concludes today's conference call. 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