Good morning, ladies and gentlemen. Thank you for joining us to talk about Stantec's acquisition of Cardno's North America and Asia Pacific operations. Leading the call today are Gord Johnston, President and Chief Executive Officer, and Theresa Jang, Executive Vice President and Chief Financial Officer. After the remarks, there will be a question and answer session, and the operator will provide instruction at the time to queue for questions. This webcast and call is being recorded and will be available for replay after the event. Stantec invites those dialing in to view the slide presentation, which is available in the Investors section at stantec.com. All information provided during this webcast and call is subject to the forward-looking statement qualification set out on slide two, detailed in this morning news release and incorporated in full for the purpose of today's call. Listeners of today's call and webcast are cautioned not to place undue reliance on the forward-looking statements, since a number of factors could cause actual future results to differ materially from the expectations expressed in these forward-looking statements. This morning's call will make use of non-IFRS measures and pro forma information as defined on slide three. These non-IFRS measures may not be comparable to similar measures presented by the companies. We believe that the measures defined here are useful for providing investors with additional information to assist them in understanding components of the acquisition. It should be noted that dollar amounts discussed in today's call are expressed in US dollars. Generally rounded. With that, I will turn the call over to Gord Johnston, Stantec's President and CEO. Thanks, operator, and good morning, everyone. Thanks for joining us on short notice. We're very pleased to announce our acquisition of Cardno's North American and Asia Pacific business. Cardno has a rich 75-year history of providing environmental and engineering services to clients around the world, and combining our firms provides significant client and revenue-generating synergies. This is a needle-moving transaction that supports the growth and diversification objectives of our strategic plan. Cardno's approximately 2,750 employees and annual net revenue in excess of $350 million significantly expand our footprint in North America and almost double it in Australia. This transaction supports our goal of growing our global operations by shifting our geographic mix so that now 25% of our net revenue will be generated outside of North America. Each of our key regions, Canada, the U.S., and global, are now projected to generate over CAD 1 billion in annual revenues, a key milestone for us. Approximately half of Cardno's revenue relates to environmental services, with the balance related to infrastructure, community development, and water. Building on our environmental platform, the addition of Cardno's environmental expertise grows our environmental services revenue to represent 20% of our pro forma net revenue, augmenting our industry-leading position. Our infrastructure business grows to 30% of pro forma net revenue with the combination of our teams, strengthening our positioning to benefit from global infrastructure stimulus. Collectively, this transaction bolsters our ability to address the world's critical sustainability and infrastructure needs. Cardno's been on our radar from an acquisition perspective for many years due to their attractive business mix and geographic presence, and the timing couldn't be better for the combination of our firms. Cardno's seeing the benefits of their multi-year effort to strengthen their operations, and this, coupled with their growing revenue backlog and global environmental and infrastructure tailwinds, positions the combination of our firms well for growth and success in the coming years. A key element of this transaction was our ability to select the components of Cardno's business that are most strategic and complementary to Stantec, specifically their North American and APAC operations. For clarity, the transaction does not include Cardno's Latin American operations, nor their international development group. Now I'll turn things over to Theresa to walk through the financial details of the transaction. Thank you, Gord, and good morning, everyone. In addition to the strong cultural and strategic fit, this transaction is financially compelling. We're acquiring Cardno's North America and APAC Engineering and Consulting Groups for $500 million, or approximately CAD 620. This is 9.4x projected 2022 pre-IFRS 16 adjusted EBITDA after synergies. Even without cost synergies, we expect to be immediately accretive by double digits relative to adjusted EPS. The businesses we're acquiring have an EBITDA margin profile that's on par with Stantec's industry-leading margin. We expect annual run rate cost synergies of approximately $10 million to be achieved over the next 2 years. Of course, the real opportunity for value creation will come from revenue synergies, which we have not incorporated into our financial metrics. We're funding the acquisition through a combination of existing cash on hand and by drawing on our credit facility. At close, we expect pro forma net debt to adjusted EBITDA to be 1.5x, well within the target leverage range of 1 - 2x. By the end of 2022, the strength of our cash flow generation should have our leverage back down to the low end of our target range. With that, I'll turn the call back to Gord to review the strategic merits of the transaction. Thanks, Theresa. This acquisition aligns completely with the strategic plan we launched in December of 2019. The addition of Cardno's talented US employees will drive the largest increase in our U.S., presence since the MWH acquisition back in 2016, adding 1,500 people and increasing our footprint by 15% from where we are today. This adds 1,100 employees to our US Environmental Services Group, representing a 60% increase in our headcount and doubling our size from where we were five years ago. The 1,250 employees in Asia Pacific that will be joining us from Cardno will almost double our presence in Australia, further strengthening our diversified platform, and it establishes Stantec as a top-tier engineering and design firm in the region. Cardno has a diversified business portfolio in Australia, with transportation and community development generating roughly 60% of annual revenue, with water and environment contributing the remainder. As you can see from the pro forma business combination graph on the lower left of the slide, combining our groups provides a well-rounded business mix that will provide significant cross-selling opportunities. Infrastructure, namely transportation, will be our largest business line in Australia, our combined transportations team stands to benefit significantly from the AUD 118 billion in the Federal budget allocated to transportation infrastructure. The addition of Cardno's infrastructure group and our highly complementary recent acquisition of GTA Consultants are well-positioned to capture an increased share of this work. There are other opportunities for accretive revenue generation as well. Cardno is one of the largest providers of community master planning in Australia, it fills in the white space we had from a community development perspective in the country. In addition, new legislative standards tightening regulations around mine closure were put in place in 2020, and the Cardno team was awarded the first major mine closure under the new standards. This, coupled with our recent acquisition of Engenium, positions us well to capture an outsized allocation of future mine closure work. The Australian operation also includes a 115-person delivery center located in Manila, and we're looking forward to leveraging this group as we do with our Pune, India, delivery center to enhance both project and client base outcomes. In the U.S., about three-quarters of Cardno's business is focused on the environment and human health through their natural resources, ecosystem assessment and restoration, and health sciences teams, while the remainder is focused on transportation infrastructure. As the world and our clients respond to climate change and environmental concerns, we've seen Stantec's environmental services backlog grow in the mid-20% range through Q2, and expanding our environmental footprint to meet client needs is essential. As mentioned earlier, adding the 1,100 US employees from Cardno's environmental practice grows our combined US environmental services presence by 60% and doubles it from where we were five years ago. While we already occupy a leadership position related to ecosystem restoration, Cardno adds a complementary offering through their native seed bank and plant nurseries that allow for the restoration of native species throughout much of the United States. This additional offering will allow us to garner an increasing market share in the rapidly growing ecosystem restoration market. Cardno's strong presence in transportation infrastructure and enviable reputation with state and local government clients dovetails nicely with Stantec's transportation client list. It provides us considerable opportunity for client and service expansion. Combined, our increased footprint positions us well to secure an increased market share of state and local transportation funding associated with the US infrastructure stimulus package when it's passed. The opportunity for continued expansion into providing services for the U.S. Federal Government is particularly exciting. In addition to our complementary service offerings and long-term contracts with the U.S. Federal Government, Cardno has a division that undertakes contracts requiring various levels of security clearances. We see the opportunity to continue to expand contract capacity in the secure project area with the benefit of additional Stantec resources and service offerings. Finally, Cardno's growing health sciences practice represents a new growth platform that provides expertise in toxicology, industrial hygiene, epidemiology, medicine, modeling, and risk assessments. The American Council of Engineering Companies expects the bipartisan infrastructure stimulus bill to drive double-digit growth in the engineering space between now and 2026 once it's passed. The table on the right-hand side of the slide shows the significant areas of the proposed bill that fall within the scope of both Stantec and Cardno. The potential US infrastructure stimulus funding, coupled with that previously noted in Australia and additional stimulus in New Zealand, provides a strong tailwind for our combined operations over the next several years. Stantec is already a top-ranked firm in its space for sustainability. In addition to being named the fifth most sustainable company in the world by Corporate Knights this year, we consistently come out on top in sustainability rankings across multiple independent third parties. Stantec's global leadership in sustainability will be further augmented by the passion and entrepreneurism of Cardno's professionals, who, like us, work at the intersection between clients, science, and innovation to solve the ever-evolving challenges confronting communities around the world. Cardno's sophisticated approach to ESG and sustainability services aligns with Stantec and will further strengthen our leadership position in the marketplace. We often talk that cultural fit is the most important criteria when it comes to our evaluation of a potential acquisition because it truly informs the degree to which a combination will be successful. We've spent a great deal of time with Cardno. Through many projects together and in discussion with their senior management team over the past four months, we see tremendous alignment between our firms. Beyond a 1-for-1 match of our externally published values, the lived values of both teams are similar. There's a common commitment to ethics, safety, communication, and people and performance. Cardno staff are also familiar with what it's like being in a public company, and I have every confidence that Cardno's employees will feel at home within Stantec. In terms of a timeline, Cardno has called for an extraordinary general meeting, which is expected to be held on or about the 6th of December, at which time their shareholders will vote on the acquisition. Cardno's largest shareholder, Crescent Capital Partners, holds over 55% of Cardno shares and it has informed Cardno that it intends to vote in favor of this transaction. Completion of the acquisition is subject to the transfer of non-core businesses outside of the select assets that we're acquiring, the expiry or termination of all Hart-Scott-Rodino Act waiting periods, and approval of the acquisition by the Defense Counterintelligence and Security Agency of the U.S. Department of Defense. We expect the transaction to close before the end of the year and for integration to begin at that time and carry forward through 2022. As I mentioned earlier, this transaction aligns with the strategic plan we launched in December of 2019 and tracks to all of our key 2023 financial targets. Cardno's added revenues alone are expected to boost our 2022 net revenue by more than 10%, that's before any additional US stimulus spending is included or any anticipated revenue synergies are achieved. We expect to achieve immediate double-digit accretion to adjusted EPS even before any synergies. Cardno's EBITDA margin profile is consistent with our own and will contribute to our progress towards our 2023 target. On a pro forma basis, this acquisition supports our targeted return on invested capital. We're excited about the impact Cardno team members will have in advancing our goal to be top tier in all the markets that we serve. We look for firms with strong leadership, creative ideas, and a passion for the work that they deliver to their clients, we have found that with Cardno. With that, we'll open up the call to questions. Operator? Thank you. As a reminder, participants, to ask the question, you will need to press star one on your telephone keypad. Again, that's star, then the number one on your telephone keypad. To withdraw your question, press the pound key. We have a question coming from Benoit Poirier from Desjardins Capital. Your line is now open. Hey, good morning, Gord. Good morning, Theresa. Congratulations for the announcement this morning. Great. Thanks, Benoit. Yeah. Could you talk about how strategic is the Cardno acquisition ahead of the US infrastructure bill, and could you maybe expand a bit on the potential revenue synergies you see with Cardno? Absolutely. As we look at the strength of Stantec and our service offerings in relation to the addressable areas of the bipartisan infrastructure bill, we often sometimes will say that it's almost like they took the Stantec business lines and wrote the plan around it because we service so much of that. The addition of Cardno really strengthens our service offerings in a number of areas in the United States, specifically related to transportation infrastructure, which is the largest bucket of the funding sources, as well as in the environmental remediation section, and particularly with regards to ecosystem restoration. We're really excited about that, Benoit. We have a lot of common clients throughout the United States that will continue to grow. I think we're also equally excited in Australia, where the combination of our teams, as we mentioned, almost doubles our size there and really gives us that critical mass. We have, again, complementary clients down there, a lot of good opportunities for cross-selling. When we talked about the service expansion opportunities there into community development, further expansion into mine closure and so on. We're really excited about how this is additive to a number of our existing service offerings, but then brings new opportunities for us as well. Very positive about the opportunities in the future. Okay, that's great color, Gord. Now if we look at integration, how it would differ from MWH, given the learning made over the years and the fact that you now have a global platform. If you could expand a little bit about the integration with Cardno, that would be great. Absolutely. We are a much different company now than we were in 2016 when we acquired MWH. Now with the addition of MWH and the other firms that we've added, of course, in Australia and the U.K., and others. In Australia, for example, we have a fully developed and experienced leadership team in place, whereas that was not the case with MWH back in 2016. Now, we've grown our presence in Australia from about 400-ish people that came with MWH to 1,400 now. Very strong leadership team, which certainly was a big part of our due diligence assessment there. Our Oracle ERP is rolled out in Australia. Now as we look at adding these additional staff members that come from Cardno, we're building on an already strong and experienced leadership team and group there. That's much different than our situation from 2016, and I think significantly reduces the integration risk that we have with Cardno over what we had five years ago with MWH. That's great. Last one for me, could you maybe provide more color about the M&A pipeline and whether you would prefer to digest Cardno before looking at some other M&A opportunities, or you'll try to remain opportunistic in this M&A environment? Right now, the primary focus for us is to bring in the Cardno folks and do the best job that we can to really get the synergy that we're expecting from that. The pipeline is full, we'll be continuing to look, of course, for other opportunities as well. This Cardno acquisition for us is extremely important, extremely strategic, and we want to make sure that both for Stantec and for the Cardno employees, that we spend the time and focus to do this properly. Thank you very much [for the time.] Great. Thanks, Benoit. Your next question comes from the line of Frederic Bastien from Raymond James. Your line is now open. Hi. Good morning, everybody. Morning, Frederic. Gord, you mentioned that you had been looking at Cardno for some time, but when did you start engaging in serious discussions around a potential transaction? That would've been in the summer. In the June sort of timeframe, we began having discussions then through July. Management presentations were in August. We've been actively working on due diligence, meeting with Cardno senior leadership for roughly the past four months. Okay. Thanks for that. I guess one of the hardest things to gauge when making bigger size transaction is whether there's a natural fit between Stantec and Cardno's cultures, and sounds like you had some time to get a better appreciation of how that was the case. Is that correct? Absolutely. One of the things that we always talk about is that when we evaluate a firm for potential acquisition, the first thing we look for is culture. Even if you can make all the financial numbers work out, if the culture just doesn't align, if they don't have a strong leadership team, and for Stantec, we look for that entrepreneurial drive, then we don't think that we'll be successful in the long term. Certainly, through all of the work that we've done with Cardno leadership, through all the other people that we've interfaced with at the company, we feel that strong cultural alignment with them. We're really looking forward to bringing them into the Stantec family. Thanks for that. You mentioned that Cardno management have done a good job transforming the business, returning it to a strong growth path. Can you give us an idea of what wasn't going so well for the business before? Sure. Well, maybe just a little bit of stepping back in time to set the stage, because I know a lot of people in North America aren't familiar with the overall Cardno story. Cardno has been around for about 75 years, 76 actually. They went public in 2004, and between 2004 and 2014, they completed over 40 acquisitions. Those acquisitions weren't fully integrated. It really was in about 2015 where their current CEO, Susan Reisbord, who I hope many of you will get to meet because she is just a fantastic leader. Susan joined the firm and began to work through, and in Cardno they call it the turnaround. She started the turnaround in North America, and really working with the teams there from about 2016 through 2018, they worked hard on the turnaround, bringing a little bit more focus and financial discipline back to which projects they would pursue, how they were delivering them, some changes to the leadership team. During that period of time, some of the firms that had been acquired over time were divested or otherwise leaned out. As you look at the timeline, we kind of think that 2016 through 2018 was the time of the Americas turnaround. Now if you're to look at their FY 2021 results that are up on the website, you'll see those EBITDA margins now approaching 15%. You'll see top and bottom line growth for the last 5 years. That North American turnaround is complete. Then in 2019, Susan took over as CEO of Cardno, and that's when really the Australia, New Zealand turnaround began, 2019, 2020 through 2021, along the same focus, more financial discipline as to what projects we're pursuing, the delivery pipeline, leadership team enhancements and so on. You're really beginning to start to see those improvements now. You'll see FY 2021 over 2020, some strong improvement there. I think importantly, we're exiting FY 2021 at the run rate that we need to achieve our 2022 goals. We feel very, very comfortable that things are on the right track there. I think the ultimate beneficiary of all of this work that's been done are certainly the employees of Cardno, their clients, and certainly now as that team joins Stantec, I think collectively we'll all benefit from it. It's interesting when you look back at the history of where Stantec came from. Starting in 2018, we divested of our construction business to return us to pure-play engineering, which is sort of where we are now, engineering, architecture, and so on. Cardno went through a similar path in terms of divesting some of those acquisitions that it came on. Then, of course, through the demerger of Intega back in 2019, again, sort of returning to their pure-play engineering and consulting business. We're on a similar path. Stantec was maybe a year or two ahead, but we feel very, very comfortable, Frederic, with where the organization is now and more importantly, where it's going in the future. Great. That's super helpful, Gord. Appreciate it. My last question, is Asia Pac mostly Australia and New Zealand, or does it include other jurisdictions? The vast majority is in Australia. We have a small presence in New Zealand, and as well, there's about a 115 person delivery center in Manila that would also be included in Asia Pac. Got you. All right, I'll turn it over. Thank you very much, and congrats. Great. Thank you. Your next question comes from the line of Yuri Lynk from Canaccord Genuity. Your line is now open. Good morning, Gord and Theresa. Congrats on the. Hi, Yuri. transaction. Thank you. Good morning, yeah. It's just a clarification question, Gord. Usually when these acquisitions are presented to us, it's on trailing numbers. I noticed that the EBITDA projection is on fiscal year 2022, which I think is to June. Just what's the difference in the numbers between that would cause you to want to look at more forward numbers than the trailing numbers? Yeah, maybe I can start with that, Yuri. I think you highlight something that is actually really important to understand where this transaction and the valuation is concerned, and that is chiefly what Gord just described in terms of the turnaround that Cardno has been undergoing. When we look at a transaction like this, it's for us, less useful to look at the past as an indicator of earnings performance. What we've looked at is the more recent past, the turnaround we're seeing as Gord described, and very strong performance in their 2022 year to date performance. It's outperforming other budgets, that's very positive for us. The other thing that we need to take into consideration is sort of the outsized impact that COVID has had on Cardno's Australia and New Zealand business, which of course is a big part of what we're acquiring, hit particularly hard in that region of the world. Again, we're starting to see recovery, and we believe as we look at the growth trajectory that we see in our business there and apply what we believe to be sort of consistent metrics to that, would be some of the reasons why we have focused more on the 2022 earnings forecast than on historical results. Yeah, no, that makes perfect sense. With regards to the cost synergies, when do you anticipate having those in place? We see those as occurring over the next two years. Again, lots of focus on integration upfront. Believe that the $10 million will be achieved over the next two years. Okay. That's it for me. Thanks again. Thanks, Yuri. Thanks, Yuri. Your next question comes from the line of Jacob Bout from CIBC. Your line is now open. Good morning. Morning, Jacob. How should we think about the Cardno APAC margins and organic growth in 2022? Theresa and I are in different locations, so if we were in the same room, we'd look at each other and decide who was going to respond. Maybe I'll start and then Theresa can add there. We certainly see the margins continuing to strengthen in 2022 over where they were in 2021, and that's really as a result of that turnaround plan. I don't know that we're because we're going to integrate that with all of our other groups, I'm not sure that we're ready to call out anticipated EBITDA margins, but certainly they will be strengthened over where you saw in 2021. Yeah, I think that's right. I would add that, again, our combined view of the business shows us that the margins are completely in line, if actually not even slightly better than our adjusted EBITDA margins. We're very optimistic that combining the firms together will provide a solid margin platform for the company. How much work is left to be done in the APAC turnaround? The business discipline that was brought in place over the last couple of years is in place. The leadership enhancements that have been made are in place. Really, where we are now is just beginning to see the benefit of those coming through. There's always work to do, even in our ongoing operations. You can never say that you're done, but the heavy lifting is complete. Okay. When you made the comment, earlier, you said, that the acquired assets will have similar margins to, I guess, Stantec's legacy business. Is that for 2022, or is that something we should be thinking two, three, four years out? Yeah, the margin profile is currently consistent with ours. Okay. Then how should we be thinking about organic growth for the acquired assets for 2022? We exist in similar marketplaces for the most part. I think as we think about the Stantec organic growth rates, we would expect similar from Cardno. We haven't put out all the numbers yet for next year, but we do see some pretty good tailwinds for our industry overall in the geographies that we're talking about here, the U.S., Australia, New Zealand. Pretty solid organic growth rates, and we expect that they'll be similar to what we're going to see in legacy Stantec. Thank you. Your next question comes from the line of Mark Neville from Scotiabank. Your line is now open. Hey, good morning, Gord. Good morning, Theresa. Congratulations. Morning, Mark. Maybe just to follow up on the historical operating performance. Gord, really appreciate the history lesson, but I guess if I'm understanding correctly, the North American operations were fixed all of 2018. Australia and New Zealand, heavy lifting's done. When you're talking, again, just I guess trying to understand the margin, consistent margin now, is that get incrementally better as Australia, New Zealand's fixed, or is that sort of assume that it's done? I'm just, I guess, trying to understand where Australia, New Zealand's at versus where margins are at, versus where could they go. Their margins most recently have stabilized, and again, continuing to adjust like everyone as we come out of COVID. I would say that their margin performance as we see it today will strengthen slightly. They're pretty strong where they sit today. Again, we've got a lot of comfort that that heavy lifting has been done and that discipline has been brought into the organization. We feel good about where it sits today, and then we'll just see continued improvement over time. Any synergies that we plan to achieve will be fairly broad-based across the organization. Segment-wise, you'll see some uplift both in Australia and in the U.S., Okay. Just to follow up on that a bit. In the North America, we're already sitting at just shy of a 15% EBITDA margin based on FY 2021, whereas APAC was down in the 4% range. We certainly, while we'll see some strengthening in North America, the majority of that strengthening will come from now the turnaround is taking effect down in Australia. Okay. I guess the gap between the 4 and the 15, you're pretty comfortable that what needs to be done has largely been done? Absolutely. Okay. Maybe just on the multiple, I'm just trying to consolidate pre- and post-IFRS. If my math is correct, would that sort of put the post-IFRS multiple at roughly 8x for this asset? That would probably be about right. We have really looked at it from a pre perspective. Again, your valuations are sort of done agnostic of IFRS 16. That's probably about right. Okay. Maybe just one last one. Just in terms of shareholder support, I think you mentioned the largest shareholder agreed to mention the vote in favor of this. Is there anything else? I'm just curious from the shareholder side, sort of what you need to get the deal done. Our understanding, Mark, is that it's 50%+ one is required in terms of the shareholder support. Crescent Capital, the largest shareholder, and all the members of the board have said that they will vote their shares in favor. We feel very positive that the transaction will be approved at their meeting in early December. That sort of 51%, that's the consolidated, that's the total, and that's not the minority, correct? The minority of what's left after the largest shareholder. I'm just not sure if it's the ownership structure. The largest shareholder currently owns a little over 55% of the shares outstanding. We feel comfortable going forward. Yeah, 51% of the 45 remaining. Oh, right. Sorry. Yes, exactly. No, that's right. Yeah. Okay. 51 of total. Okay. Thanks a lot. Appreciate it. Great. Thanks, Mark. Your next question comes from the line of Michael Tupholme from TD Securities. Your line is now open. Thanks. Good morning, Gordon, Theresa, and congratulations on the announcement. Thanks, Michael. My first question relates to the backlog of the Cardno assets you're acquiring. Can you speak to what the backlog looks like? Related to that, it sounds like recently, Cardno's operations have seen a pickup in growth. I'm wondering how the backlog has trended as well. Sure. Over the last year, for example, maybe I'll start in Australia. The backlog year-on-year in Australia was up a little over 11%. That, very positive, and it continues to support that turnaround there. Here in the US operations, it was kind of flat. Backlog was flat over the year, just down slightly, about a little over 1%. Again, that's on a mature operation. I think we're quite comfortable with the backlog in general, but we're sitting at about 11 months of backlog for Cardno versus the 12 months for legacy Stantec. Pretty comparable. Okay. That's helpful. Thank you. Can you talk about what happens at the leadership level? What leadership is joining Stantec from Cardno coming with the transaction, and how does that work? Yeah. As we've met with the senior leadership of Cardno over the last four months, truly, we've been extremely impressed with their level of dedication, engagement, and professionalism. All of the leaders of the operations of which we're taking, the Americas and Australia, are coming with the transaction. There are some members of the corporate head office, the CFO, for example, that will stay with legacy Cardno. All of the client-facing, revenue-generating leadership that is with Cardno currently will join Stantec as well. Okay. You were asked about cross-selling opportunities, and you mentioned, or you spoke to them to an extent in your prepared remarks. Can you elaborate a little bit, just first off, I guess, any sense, high level, how material that opportunity is? What is the expected timeline for potentially beginning to realize cross-selling opportunities? How long does that likely take? Are there a couple of areas in particular where you see the greatest opportunity? Yeah. As always, as soon as we announced this morning the transaction, I've got emails from legacy Stantec staff already saying, "Hey, can I reach out to this person? Can we start working together?" What we have to do is just caution everyone that the transaction isn't complete until it's approved in December. We have to dampen the enthusiasm that legacy Stantec staff have on beginning to move forward with these cross-selling opportunities already. We can still work absolutely in a sort of a prime sub arrangement, but we can't fully integrate our teams at this point. We see great cross-selling opportunities that will start virtually immediately. In particular, some of the areas that I think that we have great opportunities for cross-sell is with the Cardno Health Sciences Group, which we currently at legacy Stantec have limited size and scope in. What that group brings to us will significantly. It is new service offerings. I think also now we begin to see the benefit of some of the acquisitions that we've done over the last little while in Australia. We announced the acquisition of Engenium, a really strong mining firm that supplemented the work that we have there. Now when you see the mine closure work that Cardno has, plus the mining and the mining client experience that we got from Engenium and what we have from legacy Stantec, that really gives us a much stronger position for that. On the community development side, as I mentioned, Cardno is one of the largest master planning groups in Australia. There's still a lot of inbound migration into Australia, so that's going to give us lots of strong opportunities. Certainly the U.S. Federal that, as we've talked about on our quarterly calls over the last little while, we've been putting a real focus on U.S. Federal over the last couple of years, and we're seeing considerable benefit in the work that we're doing for the NAVFAC, the Naval Facilities group, for FEMA, and for other groups as well. Cardno brings with us their ability to work on projects that require security clearance. Cardno, being an Australia-listed company, already had their FOCI clearance. That's a foreign ownership control and influence clearance. What we're going to start on working on immediately is to begin to put our plan together and our organization together to apply to transfer that to Stantec and then continue with that, which is a new offering for Stantec, and expand it with the additional service offerings that we have. Okay. That's very helpful, Gord. Thank you. Then just last one for me. I know, Theresa, you indicated that you looked at the transaction financially on a pre-IFRS 16 basis, but you're going to be reporting it inclusive of IFRS 16 obviously going forward, and that's how we need to model this. Are you able to comment on what the expectation would be as far as incremental lease liabilities that will come out of the balance sheet, and then what the EBITDA impact in terms of this would be as well, just on the IFRS 16 side? Sure. I can speak to the P&L side of it a little bit better than the balance sheet off the top of my head. The impact to Cardno's EBITDA, on a post IFRS basis, is about 25% in terms of dollar value. As you think about EBITDA margin, that will look fairly similar to when we adopted IFRS 16. It's about 4% uplift in EBITDA margin, and so we would expect to see that as well on the Cardno side. I don't have at my fingertips what the balance sheet impacts will be, but we can certainly follow up with you on that. Okay. That's helpful. Sorry, just to be clear, when you say We're talking about a 25% lift in post IFRS 16 EBITDA relative to pre IFRS 16 EBITDA. That's right. Yeah. Okay. Thank you. Thanks, Michael. Again, participants, as a reminder, to ask the question, you will need to press star one on your telephone keypad. Again, that's star, then the number one on your telephone keypad. Your next question comes from the line of Ian Gillies from Stifel GMP. Your line is now open. Morning, everyone. Morning, Ian. I was hoping to get a little bit of detail on some of the tax impacts. Just given some of the struggles Cardno had historically, do you think there's much impact to Stantec's tax rates or cash tax rates going ahead? Is there any coverage you may get from this deal that may or may not be included in synergies? I don't foresee a dramatic change in our overall tax rate from this particular transaction. As far as uplift, there were some operating losses in the U.S., that we will be able to take advantage of. We did a whole bunch of diligence around that. From an overall standpoint, I don't see a big change in our cash taxes. Okay. That's helpful. Thank you, Theresa. Gord, on a strategic level specific to the U.S., I apologize if I missed this in the prepared comments, but is there any specific geographic regions that you're picking up from the Cardno acquisition that you haven't historically been strong in previously? No really new areas, but in particular, we're strengthening our transportation capabilities in the US East, particularly in the Southeast, which is a very strong market for us. The ecosystem restoration group that is very complementary and additive to ours and really significantly strengthens our capabilities there. Really, not so much from a geographic perspective where we weren't strong before, but just an overall strengthening of our team. Okay. If I could just slide in a quick third one. You've talked previously about your goal for headcount in Australia previously. Can you just remind us what that number is in, I guess, in relation to where you get with the Cardno acquisition? Yeah. We've often said that we believe that maturity for us in Australia would be getting us to that 5,000-ish, plus or minus mark. We were about 1,400. The addition of the Cardno employees takes us to about 2,500, so really strengthens and diversifies our portfolio. Australia is a great and very strong market, so there still is opportunity for us to further build on our team there. Great. That's really helpful. Thanks very much. Great. Thank you. Your next question comes from the line of Sabahat Khan from RBC Capital Markets. Your line is now open. Okay, great. Thanks and good morning. Just, I guess a comment on just buying out some of the, I guess, the North American and the APAC business. Is it going to be easy to sort of wrap up some of the projects that might be happening cross-border across some of their segments at the current operations, and sort of how are you thinking about that? Is it going to be easy to sort of siphon off and then roll into your Stantec operations? I just want to get an idea of how you're thinking about separating that business and then rolling into your operations. Their operations, Sabahat Khan, are completely complementary to ours. One thing that often occurs whenever we acquire a company is we go and talk to the client. The client's first question to us also is, do I have the same project manager on my job? Do I have the same delivery team on my job? If so, the logo on the business card is of less importance to me. I think that's really reassuring to our clients and that the leadership and the delivery teams from Cardno are coming over to join us. In terms of legacy projects that they're working on, they'll wrap them up just as they always have. The other thing is that there really is no overlap with their international development group, and we aren't taking that international development group, of course. Yes, I hope I've answered your question. As per what we normally do through these acquisitions, the delivery teams will remain consistent, the client managers will remain consistent, and when the time is right, as the acquisition completes, then we'll just begin to bid work, propose on work together, and integrate our delivery teams even further. Okay, great. Just I guess some of the commentary you made on the margins earlier, so I was hoping to get a little bit more color on it. If I'm looking at the Cardno disclosures correctly, it looks like the revenue from Asia Pac and North America is roughly similar. I know you commented that the Asia Pac margins are in sort of the 4%, 4.5% range. I guess, what's the long-term potential there? Because it looks like the Americas region is already sort of in line with what you're reporting. Where do you see the potential for this Asia Pac margin, and what could it grow to over the next few years? I guess the other question being, what is the cause of maybe the variance between those two segmented margins? Yeah. Some of the variance, of course, is legacy projects that we had on the books that the Cardno team perhaps took some time ago with less financial discipline that we're now working through. As those just naturally transition off it, and many of them are either done or will be transitioning off soon. With the additional financial discipline on both projects that they'll pursue and then on delivery, we see those naturally coming up. We'll see those margins getting into the double digits similar to our operations there. Okay. I guess, is there sort of a timeline, or I guess, or is there sort of a natural margin improvement there as some of those legacy projects wrap up? How are you thinking about that going forward? Yeah. The run rate that we're seeing now on the projects so far this year is already trending in the right direction. Will we get to those double digits in year 1? I'd like to think so, but there will always be a little bit of, as you're integrating two companies like this, there's always a little bit of uncertainty. I feel certainly very strong, though, going forward in the next year or so that we're going to be exactly where we need to be and then continue to expand on that margin profile. Great. Thank you. Thanks, [Khan. Your next question comes from the line of Maxim Sytchev from National Bank Financial. Your line is now open. Hi. Good morning, Gord, Theresa, and congrats on the transaction. Thanks, Max. Most of the questions have been asked already. Gord, I just have one for you, if you don't mind. Do you mind maybe talking about how additive the environmental services business is from Cardno in terms of expertise to kind of the legacy Stantec platform? Maybe if you don't mind just talking about that. Yeah. No, great question. As we said, it increases our headcount in the U.S., by 60%. They've got a few major lines of work that their environmental groups are involved in in the United States. We talked a little bit about the health sciences work that is, by and large, net new to Stantec, and I think is going to be a really exciting offering to our existing clients. Their ecosystem restoration group, it is very complementary to our group. We work occasionally in the same geographies, there's a lot of different geographies that we work on, there'll be limited sort of cannibalizing and overlap there. Those are very additive. I think what's really exciting is as a differentiator for our combined ecosystem restoration offering is the native plant nursery that they have, the seed bank that they have. That really is a differentiator for our overall offering. They do a lot of work in a group they call natural resources, but it's FERC and NEPA compliance work, hydro dam relicensing, permitting for renewable power. Many of those things we do as well, but they have a new client base. It's bringing in a brand-new client base and opportunities to grow there. Again, very additive. Okay, that's great to hear. Maybe just as a follow-up question to that, I presume that the client overlap, if you were trying to kind of do the Venn diagram, it's pretty limited, or how should we think about that, if it's possible? Yeah. We're both active in the marketplace, so there will always be some overlap of the Venn diagram. I would say that it is by far the minority of our clients that we would overlap. We feel very positive about combining the firms from that perspective. Yeah, for sure. Okay, wonderful. Thanks a lot. Congrats again. Great. Thanks, Max. Your next question comes from the line of Chris Murray from ATB Capital Markets. Your line is now open. Yeah. Thanks, folks. Good morning. Just going through the press release from Cardno, just a couple of questions that they pointed out. One of the things they did mention that the Crescent Capital ownership stake, they did mention that they're consenting, barring a superior proposal. A couple of questions here. One, what kind of lockups do you have on this sort of thing? Can you maybe talk a little bit about the process and why you would think that you should be okay and you wouldn't expect anything else to come into the process to kind of derail it at this point? Firstly on the process. Cardno has ran a public process that started back in June. They launched a strategic review. Firms and buyers that were interested in participating have been involved in the process. I think we were probably further ahead of everyone from a due diligence perspective. That's very strong there. We don't anticipate that with the amount of work that we've done, that a new buyer would come out of the woodwork for an already unknown process, in the next 5 or 6 weeks. Anything could happen, but it seems very unusual. The statement with regards to the superior proposal is statutory wording that's required in Australia. Whenever someone has a large block of shares, a majority shareholder who says that they're going to vote in favor, certainly, it's a statutory wording that they do say that it's subject to not a superior proposal coming in. We don't expect that will happen, Chris, but I guess we'll know in the next five or six weeks. Okay. Thank you. In terms of a lockup, I think they did say in their press release as well that we do have a break fee, and it's only CAD 5 million. In the event that something did occur, we have a break fee that would cover the majority of our cost to date. All right. Fair enough. Actually kind of moving to costs, and just thinking about the synergies. Historically, when you guys have done some of these larger transactions, there were some kind of upfront costs just for IT harmonization, things like that. Appreciating that Cardno's probably a more sophisticated operation than maybe some of the other acquisitions you've done in the past. Should we be expecting any step-up in SG&A or anything like that for integration in the near term as we go into 2022? Yeah, there always are, Chris, you're right. There's always going to be a cost to integrate companies together. I think typically you'd see a multiple relative to synergies with integration costs on kind of a one-to-one, maybe a little bit more on the integration side, and we think that would be fairly typical in this case. Okay. Fair enough. The synergies number is, that's just a gross number. That's not a net number? That's right. Okay. Thanks. Gord, the other question I had for you, just kind of going back to, you talked about the M&A portfolio. Certainly sounds like at least the Australia business is going to be pretty busy. Can you discuss a little bit, you did mention you had a full M&A pipeline. Part of the discussion that we had had was certainly looking at other parts of the world outside of just Australia, in terms of being able to grow and follow where you've made some inroads with some of the other acquisitions you've done, including MWH. When we think about your ability to do further acquisitions, certainly looks like the balance sheet's not stretched by any means, and certainly we'll walk it back through 2022. Can you talk about your capability to do something, again, of this size, maybe in another geographic area over the next little while? I think you could see from a balance sheet or a financing perspective, that is something that we could execute on. We're continuing to look for other opportunities in other geographies, certainly the U.S.,. We've talked about the U.K., Western Europe. We're continuing to look there. I do think that if we were to look at something, subsequent acquisitions, we probably would stay away from stretching our Australian teams in the next little while. We could look at something in the U.K., Western Europe, Canada, North America. Those things are always on the table. Really, I think, as we mentioned earlier, we're focused on ensuring that we do the right thing through the integration of Cardno so that we really get the value from it, and both our legacy Stantec clients and Cardno clients see the benefit of the merger. That's not to say in any way, Chris, that we will stop looking at other M&A targets, because that is absolutely not the case. We still are active in evaluating other opportunities. Okay. Do you feel comfortable that you've got sufficient management teams? You made the comment that you felt good about doing the integration because you've got a more senior management team now in place in Australia. Do you feel a similar comfort level in other parts of your geographies? Absolutely. The maturity that we've got in place now in the U.K., for example, very similar to the statements that we made related to Australia. Coming in with really building off the MWH platform that we got in 2016 from the water side. Now adding Peter Brett Associates, which was a significant acquisition there, and some other firms as well that we bolted on. We have a mature, experienced leadership team in the U.K., really, and in Western Europe as well. From a similar perspective, even with travel difficult, we could source due diligence and integrate another firm over there. Again, just from the maturity of our overall global model at this time. All right. That's helpful. Thanks, folks. Great. Thank you. Speakers, we don't have any questions over the phone. Please continue. Great. Okay. Well, thanks everyone for joining us on the call today. We're really excited about this acquisition of Cardno, and we look forward to speaking with you on November 4th when we discuss our third quarter and year-to-date results. Thanks again, everyone. Have a good day. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.